Why Is Peak Rare Earths Switching Its Buyer to Shenghe Singapore in $158M Deal?

Change in Acquisition Structure

Peak Rare Earths Limited (ASX, PEK) has announced a significant update to its proposed scheme of arrangement. The acquiring party will now be Shenghe Resources (Singapore) Pte. Ltd., an existing 19.7% shareholder, replacing the previously proposed Ganzhou Chenguang Rare Earths New Material Co., Ltd. (via its subsidiary Australian Mining Investment Management Pty Ltd). This strategic shift is notable for removing the need to secure regulatory approvals from the People’s Republic of China, as Shenghe Singapore plans to fund the acquisition with offshore capital.

Scheme Valuation and Consideration

The scheme values Peak Rare Earths at approximately A$157.99 million, reflecting the successful completion of a recent entitlement offer that raised over A$7.49 million before costs. Shareholders participating in the scheme can expect a minimum cash consideration of A$0.359 per share, with the final figure to be confirmed upon scheme effectiveness based on the fully diluted issued capital. Notably, if all outstanding performance rights lapse prior to the scheme’s implementation, the consideration could increase to around A$0.367 per share.

Regulatory and Board Approvals

While the Mining Commission of Tanzania had previously approved the acquisition by AMIM, Peak will now seek the necessary consent for Shenghe Singapore’s acquisition. The company has committed to updating the market once all Tanzanian regulatory approvals are secured. Meanwhile, the Peak Independent Board continues to unanimously recommend shareholders vote in favor of the scheme, subject to an independent expert’s positive opinion and the absence of any superior proposal. This endorsement includes the intention of board members to vote their shares in favor of the transaction.

Next Steps and Shareholder Engagement

Shareholders are not required to take any immediate action. A detailed scheme booklet, including the independent expert’s report and the board’s recommendation, is expected to be dispatched in August 2025. The timetable anticipates the scheme meeting in early September, with court approval and scheme effectiveness targeted for late September or early October. The transaction includes comprehensive legal provisions covering warranties, indemnities, exclusivity, and termination rights, reflecting the complexity and significance of the deal.

Strategic Implications

This restructuring of the acquisition pathway simplifies the regulatory landscape for Peak Rare Earths, potentially accelerating the transaction timeline. It also underscores Shenghe Singapore’s growing influence in the company, consolidating its position as a key shareholder and future owner. Investors will be closely watching the forthcoming shareholder meeting and regulatory developments, as well as any competing proposals that could emerge before the scheme’s implementation.