Australian Vanadium and Technology Metals Merger: A $217 Million Move

Equity Espresso

Australian Vanadium Limited (ASX:AVL) and Technology Metals Australia Limited (ASX:TMT) have agreed to a merger worth A$217 million.

Merger Details

The merger, facilitated through a Scheme of Arrangement, will see Australian Vanadium acquire all shares of Technology Metals Australia.

The consolidation of their adjoining projects into a single entity is poised to streamline operations and enhance the combined group’s position as Australia’s premier vanadium developer.

The merger agreement states that TMT shareholders will receive 12.00 AVL shares for every TMT share they possess. This translates to an offer price of A$0.324 per TMT share, based on AVL’s recent closing price.

Notably, this offer represents a 9.8% premium on TMT’s last closing price and a 26.7% premium on TMT’s 30-day VWAP.

The TMT Board has unanimously recommended this scheme, with the caveat of no superior proposals emerging and the endorsement of an Independent Expert. Furthermore, post-merger, AVL shareholders will constitute approximately 58% of the combined group, while TMT shareholders will make up the remaining 42%.

Strategic Benefits and Future Prospects

Operational Synergies: The combined entity will have the advantage of consolidating two projects located on the same ore body. This consolidation is expected to enhance project economics, offer greater expansion options, and potentially pave the way for future vanadium flow battery production in Australia.
Financial Strength: With a pro forma market capitalisation of A$217 million and a post-merger cash position of A$52.1 million, the merged entity is well-positioned for future project development activities.
Market Position: The merger will result in the creation of a leading ASX-listed vanadium company, strategically placed in a proven vanadium province, and well-poised to leverage positive vanadium market fundamentals.