Takeover target Latin Resources (ASX:LRS) has seen American multinational investment bank Goldman Sachs join its register as a substantial shareholder.
Goldman Sachs has acquired a 5.2% interest in the South America-focused lithium explorer, which just two weeks ago revealed that $8.76 billion lithium major Pilbara Minerals (ASX:PLS) had lobbed a takeover bid for the junior explorer.
It is the second largest investment bank globally by revenue, which came in at about US$46.25 billion ($68.05 billion) in 2023, and ranked 55th on the US Fortune 500 list.
At the same time, Swiss investment bank UBS has increased its substantial interest in Latin Resources to 7.49%.
Under the proposed binding scheme implementation agreement, Latin Resources shareholders will receive 0.07 Pilbara Minerals shares, and own about 6.4% of the company on completion.
Based on Pilbara Minerals’ closing price of $2.85 per share on 14 August 2024, the transaction implies a value of $0.20 per Latin share, representing a 57% premium to the company’s 10-day volume weighted average price of $0.127 per share.
Since news of the takeover play broke, Latin Resources shares have rallied as much as 79% to a high of $0.215.
Goldman Sachs currently owns about 145.5 million shares, while UBS holds 150.2 million shares.
Latin Resources had been working towards development of the Salinas Lithium Project in Brazil, but the depressed market has made things more difficult.
In a letter to shareholders following news of the proposed merger, Latin Resources Managing Director Chris Gale said the junior, which has a market capitalisation of $573.9 million, had done all it could to “weather the storm in lithium markets over the course of this year”.
“Whilst your board is confident that we could have continued on the pathway to development as an independently listed company, the reality is that the world has changed dramatically in the last 12 months and the challenges of raising the capital we need to develop Salinas have risen significantly,” he told shareholders.
“The scheme implementation agreement agreed with Pilbara Minerals takes most, if not all, of those challenges off the table.”
All Latin Resources directors have agreed to support the tie-up.
Write to Angela East at Mining.com.au
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