Nzuri Copper announced today that it received the last required regulatory approvals in China. When I wrote about the company in July the merger was already delayed, but by then the company was aiming for a close at the end of August. They obviously failed to hit that target, and the expected merger date was pushed back many times more. Of course, it’s still not a done deal, and in today’s announcement the expected closing date of the merger is now early March. But with all regulatory approvals in the pocket I don’t expect that there are more issues remaining that could cause further delays.
While in the end I got the result I was betting on, it’s tough to say in hindsight if my thesis was correct or not. It’s quite possible that those delays were indicative of a real problem that could have blown up the merger. Or perhaps it was just some administrative issue. Who knows?
Disclosure
Author is long Nzuri Copper
Thanks for the idea, very appreciated. It has been a interesting ride, hope the last part goes smoothly!
Hope so as well! 🙂
From my experience, there are many delays in getting all the regulatory approvals, and this doesn’t look out of the ordinary in my eyes, especially considering the complexity. You think this was unusual?
I do not think there was no risk in the deal going through but the delays were not my concern.
What is ordinary for an Australian company with assets in Congo that is being acquired by a Chinese company? Does ordinary exist? Obviously my thesis was that regulatory there wouldn’t be a real concern because there just isn’t (or I didn’t hear it) a compelling argument why this deal would be a problem, but at the same time, who really knows?
Yes, so considering the fact that it is such a complicated deal, why are delays in regulatory approval a concern? possibly indicative of a real problem that could have blown up the merger?
I wouldn’t call it complicated, just a deal with many unknowns. And yes, I do think that delays in general could also be indicative of real problems.
If you read Chinese, you can see months ago the acquirer has already pledged assets to get the forex financing for this deal. The main problem was Chinese banks are definitely short of foreign reserves. There are companies that have to wait for half a year to get approval for ADS dividend. But you’d think a mining acquisition should be fast tracked, so the wait turned my stomach quite a bit.