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Bacanora Lithium Acquisition

JuanDB
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Bacanora Lithium Acquisition

#410343

Postby JuanDB » May 8th, 2021, 7:21 pm

Bacanora Lithium (BCN) have announced an offer to take the company private at 67.5p by their partner and major shareholder Ganfeng. The offer Comes with the recommendation of the BCN board. BCN closed at 58p on Friday. At face value there seems to be a price arbitrage opportunity with a 16% uplift from current market price to offer price.

Interested in others thoughts on the risks here. As I see it:

Offer is provisional, subject to approval by Chinese government. I assume given strategic nature of lithium in future energy needs this will be forthcoming.
Other major shareholders, I believe M&G is one, may not agree to the offer.

Other than that this seems a reasonable bet.

Thoughts?

Cheers,

Juan

spasmodicus
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Re: Bacanora Lithium Acquisition

#411284

Postby spasmodicus » May 12th, 2021, 10:09 am

JuanDB wrote:Bacanora Lithium (BCN) have announced an offer to take the company private at 67.5p by their partner and major shareholder Ganfeng. The offer Comes with the recommendation of the BCN board. BCN closed at 58p on Friday. At face value there seems to be a price arbitrage opportunity with a 16% uplift from current market price to offer price.

Interested in others thoughts on the risks here. As I see it:

Offer is provisional, subject to approval by Chinese government. I assume given strategic nature of lithium in future energy needs this will be forthcoming.
Other major shareholders, I believe M&G is one, may not agree to the offer.

Other than that this seems a reasonable bet.

Thoughts?

Cheers,

Juan


Hi Juan,

the lithium sector has been experiencing a bit of a boom over the last year or so and I am still optimistic in the long term about Lithium and other EV and electrical power related minerals. However, even the larger companies, e.g. Albemarle ALB which I hold, are quite volatile, indicating imo quite a high degree of speculation. Albemarle dropped 10% last Thursday, despite reporting a 12% increase in revenue for the quarter. This article from our chums over at the Motley Fool suggests why
https://www.fool.com/investing/2021/05/06/why-lithium-stocks-albemarle-livent-and-lithium-am/

ALB susequently recovered about half this drop, despite general weakness in the US stock market. With a one year high / low of 68 / 20.75p BCN is no stranger to volatility either. I think that it could go either way. For me, the possible upside, for something that might not even happen, is within the normal range of volatilitily of such a company. If the bid is turned down or not approved, there may be an opportunity to get into BCN at the lower end of its price range. Just my opinion. DYOR etc.

regards,
S


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