Chilean lithium major SQM made Kidman takeover bid, insider trading charge sheets show

An insider trading case has brought to light takeover details that lithium giant SQM was considering an offer to buy Kidman Resources.

Duncan Stewart outside court with his barrister Ruth Shann. Picture: Angelica Snowden

A Melbourne man charged with insider trading allegedly encouraged a family member to buy Kidman Resources shares while he knew they were considering a takeover offer from one of the world’s biggest lithium producers, SQM, charge sheets released by the Melbourne Magistrates Court reveal.

According to Duncan Stewart’s charge sheet, he was aware in March 2019 that Chilean company SQM “had already offered to acquire Kidman Resources Limited for $2.40 per share”, that the acquisition could happen in the week starting March 4, 2019 and that the share price could move to $2.40 “or beyond”.

The takeover offer, which has not previously been reported, ultimately did not proceed and Wesfarmers acquired Kidman Resources in September 2019 for $1.90 per share.

The Australian Securities & Investments Commission, which investigated Mr Stewart over the allegations, reported the Wesfarmers deal was worth $776m.

Kidman was delisted from the ASX after the deal and is now known as Australian Light Minerals Pty Ltd.

In a press release from August 23 this year, ASIC detailed allegations Mr Stewart engaged in insider trading twice in April 2019, when he bought Kidman shares with inside information about a proposal from Wesfarmers before it was announced to the market.

But the corporate regulator also hinted at the SQM offer by referring to a “second” offer.

“ASIC further alleges that Mr Stewart procured another person to commit insider trading on two occasions in March and April 2019, by encouraging a family member to buy Kidman Resources shares while in possession of confidential information about the Wesfarmers proposal and a second, earlier takeover offer that had been considered by the company,” the alert read.

According to Mr Stewart’s charge sheet, on March 1, 2019 he had information about SQM’s offer, which was not generally available.

“If it were generally available, a reasonable person would expect it to have a material effect on the price or value of particular Division 3 financial products, namely securities in Kidman Resources Limited,” the charge sheet read.

“(Mr Stewart) ought reasonably to know that such information was not generally available and if it were … a reasonable person would expect it to have a material effect on the price or value of those securities.”

It further alleged that Mr Stewart, between April 2 and 3, 2019, had information about a possible Wesfarmers deal including that “Wesfarmers Limited was interested in acquiring Kidman Resources Limited”, that “Wesfarmers was likely to make a takeover bid for Kidman” and “Wesfarmers had expressed its interest in Kidman and its intent to make a takeover bid for Kidman”.

On April 3, 2019, as an agent for Rayne Investments Pty Ltd, Mr Stewart allegedly acquired “65,845 Kidman Resources Limited securities for a value of $80,635.47”.

As well, on or about April 10, 2019, Mr Stewart allegedly bought 38,760 securities in Kidman Resources as an agent for Rayne Investments Pty Ltd for $50,000.40.

At this time, according to the charge sheet, Mr Stewart knew Wesfarmers and Kidman were “in negotiations about a potential takeover” and further that they had made a takeover bid.

Last week, Mr Stewart fronted the Melbourne Magistrates’ court for a committal mention. The court ordered ASIC to hand over investigative notes, agenda task lists and summaries.

The matter will return to court in May next year.

Originally published as Chilean lithium major SQM made Kidman takeover bid, insider trading charge sheets show