MMG Limited (SEHK:1208) entered into the agreement to acquire Cuprous Capital Ltd from Cupric Canyon Capital LP, Missouri Local Government Employees Retirement System, Resource Capital Fund VII L.P., a fund managed by RCF Management, LLC and The Ferreira Family Trust for $1.9 billion on November 20, 2023. The purchase price of $1.875 billion for Cuprous Capital (the "Enterprise Value") has been calculated on a cash-free and debt-free basis. The Base Consideration is equal to the Enterprise Value less the net debt balance of $268.5 million. The aggregate consideration is also subject to the possible adjustments. MMG will pay the sum of the aggregate consideration and the aggregate debt settlement amount at completion. As at the date of signing the agreement, MMG has secured a commitment for the Shareholder Loan as to the entire sum of the Consideration. Post acquisition, Cuprous Capital will be become an indirect wholly owned subsidiary of MMG. As of December 31, 2022, Cuprous Capital has reported the net profit before and after income tax and extraordinary items was $21,027,629 and $18,898,053, respectively and had a net asset value of $888,346,603. The post expansion implied acquisition to EV-to-EBITDA multiple with 4.3x, is materially below MMG's current trading multiple and that of most other listed copper producers. At signing, the transaction is fully funded via shareholder loan but funding at completion is expected to be a combination of shareholder loan and third-party financing. Long-term financing could involve a combination of debt, equity and a potential joint venture. If the agreement is terminated by the Lead Seller solely due to the failure to fulfil any of the conditions by MMG, then MMG shall pay the pro rata portion of the SPA Break Fee, being 5% of the base consideration, to each Seller within thirty Business Days.

The transaction is subject to for all Project Licenses, the approval of the Minister of Minerals of Botswana and Energy to the change in control of Cuprous Capital brought about by the acquisition having been obtained; the approval of the acquisition by the Competition and Consumer Authority of Botswana having been obtained and not withdrawn; the approval of the Acquisition by the State Administration for Market Regulation of the PRC having been obtained and the completion of the notification filing to the National Development and Reform Commission of the PRC in respect of the Acquisition. The transaction has been approved by China Minmetals H.K. (Holdings) Limited, holding directly approximately 67.55% of MMG. As of December 22, 2023, the transaction has been approved by the Ministry of Minerals and Energy. The unconditional approvals of the acquisition have been obtained from the Competition and Consumer Authority of Botswana and the State Administration for Market Regulation of the PRC on January 30, 2024 and December 25, 2023 respectively. The transaction is immediately earnings accretive, and the transaction is also value accretive on an EV-to-EBITDA basis and on an EV-to-resource basis. Completion expected to occur in 1st half of 2024. As of February 2, 2024, the transaction is expected to close in first quarter of 2024.

Macquarie Capital Limited acted as financial advisor and Deloitte Touche Tohmatsu acted as accountant to MMG. Citigroup acted as financial advisor, Herbert Smith Freehills and Akheel Jinabhai & Associates acted as legal advisors to MMG. BMO Capital Markets and UBS acted as financial advisors to Cupric. Richard Jones and David Lewis, Rebecca Campbell, Will Smith, Michael Engel, Colin Harley (all London), Paul Tang, William Fong (both Hong Kong) and Tiaan De Wit of White & Case LLP and Bookbinder Business Law acted as legal advisors to Cupric.
MMG Limited (SEHK:1208) completed the acquisition of Cuprous Capital Ltd on March 22, 2024.