(Adds details, context, COVID-19 update)
JOHANNESBURG, April 22 (Reuters) - Glencore is taking its Toronto-listed Congo unit Katanga Mining private, the subsidiary said on Wednesday, citing limited trading liquidity and the costs of a stock exchange listing as reasons for the decision.
Katanga Mining, which produces copper and cobalt from mines in the southern copper belt of Democratic Republic of Congo, was first listed in August 1997. Glencore owns 99.46% of its shares.
“Katanga Mining Limited... has entered into a definitive agreement with Glencore International pursuant to which the company would be taken private by way of an amalgamation of the company with 836074 Yukon Inc.,” Katanga said in a statement.
Katanga shareholders other than Glencore will receive 0.16 Canadian dollars in cash per share - a 100% premium to the closing price on Tuesday, and a special committee of Katanga’s board recommended they approve the deal, the statement said.
Shares in Katanga surged up 106.7% to 0.155 Canadian dollars by 1415 GMT after the take-private deal was announced.
Among the reasons for going private, Katanga cited the “attractive” premium being given to shareholders, commodity price risks, operational risks, financial risks, and the lack of sources of financing without support from Glencore.
In response to the COVID-19 pandemic, Katanga said it was reducing spending on some operations and projects not vital to the day-to-day running of the business.
It also lowered its cobalt production target for the year to 26,000 tonnes from 29,000 tonnes previously.
Katanga said its copper cathode production increased to 67,298 tonnes in the first quarter of 2020, from 65,402 tonnes in the last quarter of 2019. Production of cobalt decreased to 5,296 tonnes in Q1 of 2020, from 6,173 tonnes in Q4 of 2019.
Katanga used CIBC World Markets Inc. and KPMG as financial advisers on the deal, and Fasken Martineau DuMoulin LLP as its legal adviser. (Reporting by Helen Reid and Zandi Shabalala, Editing by Jane Merriman, William Maclean)