In a sign of how hot the lithium market is, Canadian fertilizer producer Nutrien Ltd. sold a 24 per cent stake in Sociedad Quimica y Minera de Chile S.A. for US$4.07 billion, at a healthy premium.
The purchaser, China’s Tianqi Lithium Corp., agreed to pay US$65 per share for the Chilean producer, which represented a premium on the US$58 trading price, which surprised some analysts, as antitrust regulators in China and India had required Nutrien — the company formed by the merger of Potash Corp. of Saskatchewan and Agrium Inc. — to sell its stake in SQM as a condition of the deal.
“The price seemed good,” said John Chu, an analyst with Laurentian Bank Securities. “Because Nutrien had given advanced notice that they had to sell it, and because it was such a large block of shares, it was thought that they would have to sell it a discount, and they actually sold it at a premium.”
Nutrien has said it could use proceeds from the deal as part of its US$1.5 billion share buyback, for part of its US$8 billion in debt reduction or for other purposes.
In total, Nutrien owns a 32 per cent stake in SQM. The current sale, which the company said should close in the fourth quarter, only relates to its approximately 62.5 million class A shares, representing 24 per cent of SQM.