Western Areas has requested a trading halt while it considers the draft Independent Expert Report on IGO’s ((IGO)) takeover proposal.
Morgans says IGO believes the WSA Board intends to terminate the acquisition on the basis of the report.
Morgans has been expecting the strong nickel price could elicit a higher bid from IGO, but management has stressed that the current nickle price does not match its long-term view.
While the broker spies potential short-term weakness as funds sell in response to the news, Morgans has revised its nickel forecasts upward and increases its target price to $4.45 from $3.29 accordingly and upgrades to Add from Hold.
The broker believes the next most likely acquisition in the nickel arena would be from a potential combination of Western Areas and Panoramic Resources ((PAN)).
Sector: Materials.
Target price is $4.45.Current Price is $3.65. Difference: $0.80 – (brackets indicate current price is over target). If WSA meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges – negative figures indicate an expected loss).
