Fungoni project
Mineral sands miner, Iluka Resources' £215 million proposed acquisition of Sierra Rutile could be abandoned as the German Antitrust Authority probes the merger.

On 1 September the resolutions required to approve the merger were passed by the requisite majority of Sierra Rutile’s shareholders.

However, the merger remained conditional on prior clearance of the German Antitrust Authority.

On 5 September 2016, the German Antitrust Authority advised both companies that it had decided to refer the merger to a “Phase 2” review, which can take up to three months.

In accordance with the provisions of the Merger Implementation Agreement (the MIA) dated 31 July 2016, Iluka and Sierra Rutile now have five business days to agree how to proceed in respect of the Phase 2 review.

If the parties are unable to reach agreement on how to proceed in respect of the Phase 2 review, either party may terminate the MIA.

Iluka will further provide further information to shareholders as soon as practicable.

Original acquisition details

As originally announced, the acquisition would be implemented by merging Sierra Rutile with Iluka Investments (Iluka Newco), a wholly-owned incorporated subsidiary of Iluka International (West Africa).

As part of the acquisition, Sierra Rutile shareholders would receive 36 pence cash for each Sierra Rutile share.

Iluka Resources also agreed to also assume Sierra Rutile’s debt of approximately US$60 million.

The acquisition is expected to approximately double Iluka’s rutile resource base and secure ownership of an operation, with a long history in the minerals sands industry that currently produces approximately 130 000 t of rutile, with expansion potential up to 240 000 tpa.

Iluka MD David Robb believes the acquisition will provides the company with additional, long life (20 years plus) resources of proven quality, with further potential through resource additions, reserve optimisation and exploration, further enhancing its rutile portfolio position as the largest global zircon producer.