Nutrien cashes in with $4.07B sale of lithium stake


In a sign of how hot the lithium mar­ket is, Cana­dian fer­til­izer pro­ducer Nutrien Ltd. has 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, 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 at 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 only re­lates to its ap­prox­i­mately 62.5 mil­lion class A shares, rep­re­sent­ing 24 per cent of SQM. It also owns about 20 mil­lion class B shares, rep­re­sent­ing an ad­di­tional eight per cent of the com­pany, which it plans to sell by April 2019 to fur­ther sat­isfy an­titrust reg­u­la­tors, ac­cord­ing to Richard Downey, a spokesman for Nutrien. SQM pro­duces both lithium and potash, and reg­u­la­tors in In­dia and China were con­cerned about Nutrien’s dom­i­nance in the potash mar­ket, he said.

Tianqi is a ma­jor lithium sup­plier in China and also has a pres­ence in Aus­tralia.

Chile’s for­mer gov­ern­ment in March had tried to block the sale of SQM to Chinese buy­ers over fears it would “give China an un­fair ad­van­tage in se­cur­ing strategic re­sources,” ac­cord­ing to Reuters. SQM is the sec­ond-largest lithium pro­ducer in the world af­ter U.S.-based Albe­marle Corp. Downey dis­missed re­ports that Chilean reg­u­la­tors have raised the an­titrust con­cerns. Although the sale of class A shares come with three board seats in SQM, it is just a mi­nor­ity po­si­tion in the com­pany. He said the com­pany is an­tic­i­pat­ing reg­u­la­tory review only from Chinese and In­dian reg­u­la­tors re­lated to the potash mar­ket.

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