Shareholders in Sirius Minerals (SXX) will have to weigh a potential offer of 5.5p per share after mining giant Anglo American (AAL) tabled a takeover proposal for the company.

The proposal represents a 34% premium to the previous day’s closing price of 4.1p, and values Sirius at £386m. That is a still a fraction of the 37p level seen in 2018.

We note that the target’s shares shot up just before the market close on the day before the announcement, rising 12% on the day which suggests someone knew about Anglo’s interest before it was made public. Don’t rule out an investigation into insider trading.

A firm offer for Sirius has yet to be made, but Anglo American confirmed it is in ‘advanced discussions’ with Sirius and said it had identified the potash project in North Yorkshire as ‘being of potential interest some time ago’.

Sirius shareholders may not look favourably on Anglo’s proposal of 5.5p per share, but without any bid the company remains in a difficult position financially.

It has been trying to secure a strategic investor to help raise the $600m it needs to continue the project in its revised two-stage development plan, but the lack of any news on this front would suggest it isn’t having much luck and that a full takeover of the company could be a more plausible outcome.

Anglo American has until 5pm on 5 February to announce a firm intention to make an offer or walk away.

Sirius said it would recommend the offer if the price is the one set out in Anglo American’s proposal, and subject to ‘satisfactory assurances’ around safeguarding jobs and other stakeholder interests.

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