May 15, 2018 / 5:50 PM / 11 days ago

EXCLUSIVE-China's Tianqi nears deal to buy stake in Chile's SQM-sources

HONG KONG/TORONTO, May 15 (Reuters) - China’s Tianqi Lithium is nearing a deal to buy a 24 percent stake in Chile’s Sociedad Quimica Y Minera (SQM), one of the world’s biggest lithium producers, for about $4.3 billion, two people close to the transaction said.

Chengdu-based Tianqi, which is building the world’s biggest lithium processor in Western Australia, is set to sign a deal to acquire the stake in SQM from Canadian fertilizer company Nutrien Ltd, the people said. Tianqi is pushing ahead despite Chilean government opposition to a deal with a Chinese company.

Nutrien, formed by the merger of Agrium and Potash Corp of Saskatchewan, must sell its stake in SQM by next March as part of a commitment to regulators approving the deal. Nutrien owns about 30 percent of SQM.

Based on SQM’s market value of $14.8 billion at Monday’s close, Tianqi would pay a 22 percent premium for the shares in the world’s lowest-cost producer of lithium.

Tianqi, which is in talks with several institutional investors and banks for financing, plans to fund the deal through bank loans, mezzanine loans and its own working capital, the people said.

State-run conglomerate Citic Group and its unit China Citic Bank are considering providing part of the capital for the stake acquisition, they added.

SQM, Tianqi, Citic Group and Citic Bank did not respond to requests for comment. Nutrien declined to comment. All the people declined to be identified as the deal details were private, and they cautioned that there is no certainty that a deal would be reached.

Nutrien said last week it expects to announce the sale of its stake in SQM by the end of the second quarter. (Reporting by Julie Zhu in HONG KONG, John Tilak in TORONTO; Additional reporting by Yan Jiang of Basis Point, and Kane Wu and Tom Daly in in HONG KONG, Dave Sherwood in Santiago and Rod Nickel in Winnipeg Editing by Denny Thomas, Jennifer Hughes and Susan Thomas)

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