Investors hop into Lepidico with hostility likely

By Nick Evans and Stuart McKinnon

Investors have hopped into takeover target Lepidico this morning after the company revealed Lithium Australia’s (LIT) offer for the company was “unsolicited” and that it was not in negotiations to effect the proposed merger.

After an initial tepid response to LIT’s all-scrip bid for the company yesterday, investors decided today that LIT would have to lift its one-for-13.25 offer for the company to be successful. LIT’s scrip bid valued Lepidico at $23.8 million based on the closing prices of both companies on Friday before LIT revealed its hand.

Lepidico shares surged more than 50 per cent at the open this morning to a high of 2.1 cents. They eventually closed up 0.3 cents, or 23.08 per cent, at 1.6 cents. LIT shares closed steady at 18.5 cents.

In its statement late yesterday, Lepidico urged shareholders to take no action until the board had time to make a formal recommendation.

It also confirmed it was not in negotiations with LIT to achieve a merger.

The two companies have been at legal loggerheads since late last year over a novel lithium processing technology licensed by Lithium Australia in 2014, from a company subsequently sold into Lepidico — then known as Platypus Minerals.

Lithium Australia has been developing the technology after licensing it from Perth’s Strategic Metallurgy, and has cut a series of evaluation deals for the process from local lithium hopefuls, including Pilbara Minerals.

But the pair fell out and Lithium Australia took the matter to the Supreme Court in early November seeking declarations its 2014 licensing agreement was still in force and that subsequent developments did not infringe Lepidico’s intellectual property.

Lithium Australia said yesterday it had already won agreement from shareholders worth 17.9 per cent of its target’s register.

“LIT believes that combining the companies is in the interests of shareholders of both companies as it will bring LIT’s Sileach process and LPD’s L-Max process as well as each group’s other intellectual property under common ownership,” LIT said in a statement.