Hundreds of small shareholders have banded together in a bid to stop a lithium miner from being bought ‘on the cheap’ by Chinese predators.
In a rare grassroots revolt, some 450 individual shareholders have slammed a £190m offer for Bacanora as ‘derisory’.
They say the bid by Ganfeng massively undervalues the London-listed business, which is on the cusp of starting a huge lithium mining operation, and will leave faithful backers nursing painful losses.
Valuable: Bacanora’s flagship Sonora mine in Mexico is already part-owned by Shanghai-based mining conglomerate Ganfeng
They are calling on top City investors such as M&G for support, while some also want the Government to scrutinise the deal over concerns about China’s grip on global lithium supplies.
Lithium is a key material used to make batteries, with electronics and car manufacturers scrambling to secure provisions as demand surges.
Shanghai-based Ganfeng is China’s biggest producer of the metal and the world’s third-largest, with its customers including BMW, Tesla, Panasonic, Samsung and LG. Its boss, Li Liangbin, has been dubbed ‘Mr Lithium’.
The company already owns a 50 per cent share in Bacanora’s flagship Sonora mine, in Mexico, and is the firm’s largest shareholder with 28.9 per cent.
But now Ganfeng wants the entire business outright and has offered 67.5p per share to take control – a figure small shareholders dismiss as ‘low ball’ and ‘a steal’.
Ganfeng’s takeover needs 75 per cent shareholder support. The rebels, who have joined forces on social media to oppose it, claim to represent about 5 per cent of shares.
The second-biggest investor on the register is M&G, with 13.7 per cent. Janus Henderson, another top UK asset manager, is seventh-biggest, with 1.8 per cent.
Dawood Patel, one of the small shareholders opposing the deal who has a £60,000 holding in Bacanora, claimed that the offer price hugely undervalues the potential of the Sonora mine, due to start production in 2023.
The 34-year-old insurance adviser, from Leicester, said: ‘Everyone I have spoken to is looking at this bid and asking, ‘How on earth is this possible and why is something this low even being considered?’
‘This is a beyond-valuable deal for Ganfeng. It is going to be able to corner the market.
‘It takes years to get these mines online and in this case most of the hard work is now done and the production is funded. What they are offering is peanuts compared to what it is really worth.’
Stephen Woodall, from Pembrokeshire, said the offer is ‘laughable’. The 27-year-old electrician, who owns about £14,000 worth of stock, added: ‘Everyone loves a bargain but this is a low-ball offer.’
And student Tom Mackintosh, 18, who is based in Scotland, said he and his family have invested roughly £70,000 in Bacanora.
‘We liked the idea of the lithium play because of the trend towards electric vehicles and battery technology,’ he said.
‘But this bid just does not make any sense to us and is not even at the bottom end of what brokers had estimated the company is worth. We don’t feel like the board is standing up properly for shareholders.’
Euan Stewart, a financial adviser from Perth in central Scotland who has about £61,000 worth of shares, said he supported a continued joint venture with Ganfeng but not an outright sale to the Chinese due to security concerns.
The 50-year-old, who would make a loss on his investment at the current offer price, added: ‘Besides the financial aspect, my concern is that this is one of the largest lithium resources in the world and it is basically going to fall into Chinese hands for a steal. That cannot bode well for the western world or the UK economy. The Government should be scrutinising it on national security grounds.’
Ganfeng has not yet made a formal offer but the deadline is tomorrow. Last month, Bacanora said independent directors on the board considered the bid to be ‘an attractive proposal they would expect to recommend’.
Executive chairman Mark Hohnen stands to get about £2m for his 3m shares. M&G would receive £35.5m, while Janus Henderson would get £4.7m.
Richard Sneller, a retired former star fund manager at Baillie Gifford who is the ninth-biggest shareholder, would receive £2.6m.
M&G has yet to declare a position, with a spokesman declining to comment yesterday. And Janus Henderson did not respond to a request for comment.
But Cliff Weight, director of shareholders champion Share Soc, said: ‘When foreign joint ventures are listed on the London Stock Exchange, it is very difficult for the rights of minority shareholders to be protected.
‘Companies such as Bacanora need to be much more transparent, so it is easier for investors to understand the options and warrants that JV (joint venture) partners have. It looks like the Chinese are buying lithium assets on the cheap.’ Yesterday Bacanora shares rose 1.1 per cent, or 0.6p, to 55p.
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