Thousands of retail investors will be left out of pocket after stricken Sirius Minerals accepted a cut-price £405 million takeover from mining giant Anglo American on Monday.
Sirius became a stock-market phenomenon three years ago after grand ambitions to build a giant potash mine in North Yorkshire lured 85,000 armchair investors to back the business with their pensions and savings
However, the shares collapsed 80% last year after it ran into difficulty funding the project, forcing the company to seek a takeover or go bust.
Sirius accepted a 5.5p-per-share offer from FTSE 100 giant Anglo, crystallising huge losses for ordinary investors such as teachers and pub landlords, many of whom are from the local area.
People who put £10,000 in at the peak in 2016 will receive just £1100 back. Around half of Sirius’s investors are retail investors.
Sirius chairman Russell Scrimshaw, who earns £188,000 a year, offered a mea culpa saying there was no choice but to accept the deal.
“We acknowledge that to many shareholders our decision as a board to recommend this offer will have come as a shock. Your board deeply regrets that we could not deliver the complete stage two financing in 2019 despite a very broad and thorough process,” he said.
“We regret that we are not able to deliver on our long-term goal of Sirius being able to deliver the project into production, although we assure all stakeholders that the team has worked tirelessly and diligently over the last nine years to try and achieve that.”
Shareholders still need to vote through the deal and Sirius said any rejection of Anglo’s bid would mean investors would be likely to go home with nothing.
Anglo, led by Mark Cutifani, said the Sirius project had the potential to become a “world-class, low-cost, long-life asset” and could boost the area.
“We intend to bring Anglo American’s financial, technical and product marketing resources and capabilities to the development,” he said.
The takeover is a rare acquisition for the behemoth, whose market cap of £31 billion is 77 times that of Sirius.