Toronto-based Cobalt 27 Capital Corp. is selling out at a low point for its namesake metal, a crucial component in the lithium-ion batteries used in electric vehicles and other devices.
The company, which stockpiles and streams cobalt, on Tuesday announced a $510-million deal that splits the company along cobalt and nickel asset lines.
Its largest shareholder, Swiss private-equity firm Pala Investment Ltd., which owns more than 19 per cent, will pay $3.57 cash per share for the company’s cobalt assets. The rest of the shareholders will also receive equity in a new company that retains the company’s nickel assets plus $5 million in cash.
The announcement comes after Cobalt 27’s stock has declined 64 per cent in the past year to $3.47, in concert with falling cobalt prices, which remain volatile as the market struggles to forecast the supply-and-demand picture amid soaring excitement about the potential growth of the electric-vehicle market.
“It’s not an egregiously unfair deal based on the spot price of the metals,” said Jonathan Guy, an analyst at Numis Securities Ltd. “Many people may say that Pala is buying it out at a low in the cobalt price, but that’s why they’re doing it. They don’t think market is pricing it fairly.”