You are here: Home » Reuters » News
Business Standard

Exclusive: China's Tianqi nears $4.3 billion deal to buy stake in Chile's SQM - sources


By Julie Zhu and John Tilak

HONG KONG/TORONTO (Reuters) - China's Tianqi <002466.SZ> is nearing a deal to buy a 24 percent stake in Chile's (SQM) , one of the world's biggest producers, for about $4.3 billion, two people close to the transaction said.

Chengdu-based Tianqi, which is building the world's biggest processor in Western Australia, is looking to sign a deal to acquire the stake in SQM from Canadian fertilizer company Ltd , the people said.

Nutrien, formed by the merger of and of Saskatchewan, must sell its stake in SQM by next March as part of a commitment to regulators approving the deal. owns about 30 percent of SQM, which also has significant fertilizer production. [nL2N1PW1EH]

The more actively traded B-shares of SQM jumped as much 6.8 percent to a four-month high after the report. shares extended gains, hitting a near two-month high, and were up 2.3 percent at C$66.19.

Based on market value of $14.8 billion at Monday's close, Tianqi would pay a roughly 22 percent premium for the shares in the world's of lithium.

Tianqi's interest comes as aggressively promotes electric vehicles - lithium is a key ingredient in rechargeable batteries - to combat air pollution and help domestic carmakers leapfrog the combustion engine to build global brands.

But the SQM stake purchase could hit snags.

Chile's former government in March asked antitrust regulator FNE to block the stake sale to Chinese firms, saying it would distort the global lithium market and give an unfair advantage in securing strategic resources. FNE has until August, with the possibility of extensions, to determine whether to launch an investigation. [nL1N1QW02D] [nL2N1QR1S8]

China's to told last week that suspects other countries have lobbied to block Chinese firms from purchasing the SQM stake. [nL1N1SG0FS]


Tianqi, which is in talks with several institutional investors and banks for financing, plans to fund the deal through bank loans, mezzanine loans and its own working capital, the people said.

Chinese [CITIC.UL] and its unit <601998.SS> are considering providing part of the capital for the stake acquisition, they added.

Chinese private equity firm has also been vying for the stake, two separate people familiar with the matter said. It was not clear if GSR was raising the financing for a deal of its own.

SQM, Tianqi, GSR, and did not respond to requests for comment. Nutrien declined to comment. All the people declined to be identified as the deal details were private, and they cautioned that there is no certainty that a deal would be reached.

Nutrien said last week it expects to announce the sale of its stake in SQM by the end of the second quarter. [nL1N1SF0VM]

If the deal goes through, Tianqi would likely secure three seats on eight-member board, one of the sources said.

SQM currently has annual lithium carbonate production capacity of 48,000 tonnes in Chile, which it will expand to 70,000 tonnes by mid-2018 and to 100,000 tonnes in 2019. [nL3RV4RP]

Shenzhen-listed Tianqi, which has a market capitalization of $9.5 billion, plans to raise at least $1 billion from a Hong Kong float this year, IFR reported. Part of the proceeds would be used to finance its investments. [nL3N1RB3F4]

Tianqi makes a variety of raw materials for the battery industry. Its lithium project in produces hard rock lithium, primarily for export to

(Reporting by in HONG KONG, in TORONTO; Additional reporting by of Basis Point, Kane Wu and Tom Daly in HONG KONG, Dave Sherwood in SANTIAGO and Rod Nickel in WINNIPEG; Editing by Denny Thomas, and Susan Thomas)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, May 16 2018. 01:25 IST