$2.7bn takeover boosts mining confidence

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The mining and resources sector may start to gather momentum again following the $2.7bn takeover of Sirius Resources by Independence Group, the largest mining and resources sector deal this year to date.

In the first part of the deal, IGO has acquired all issued capital of Sirius. 

The second part, Sirius will undertake a Demerger Scheme of all its major assets, including Polar Bear and Scandinavian assets.  All Sirius shareholders will receive a stake in the demerged assets, in the newly established and listed spinoff, S2 Resources.  The demerger is subject to a shareholder vote, expected to be held in August with the transaction scheduled to implement in September this year.

Acting for Sirius was Ashurst, led by partner Roger Davies, who said the industry has sensed an upturn, now finally delivered.
“Hopefully it will mean a shot in the arm in terms of good news in M&A activity at times when we have all been reading a lot about mining closures and redundancies,” he said.  “Last year there seemed to be a lot of pessimism and doom and gloom and a wide gap between what people were prepared to pay and what people thought their assets were worth.  That gap seems to have narrowed now to the point where people are serious about doing deals.”

Though it’s hard to predict what exactly the deal means for the mining and resources sector, Davies said the outlook is far more positive than last year.

“Whether or not it will be a catalyst for more M&A deals, I’m not sure,” said Davies.  “Sometimes these things do gather a little bit of momentum, I think and you do need something to kick start a move out of the doom and gloom that we have had and there have been one or two deals announced recently so things are looking a bit better.”

Herbert Smith Freehills acted as legal adviser to IGO.