By Robb M. Stewart

Copper producer Sierra Metals adopted a shareholder-rights plan to fend off a possible hostile bid from privately-held miner Alpayana.

The poison pill is aimed at protecting the company against creeping bids, where a suitor buys shares in small increments that would be exempt from take over bid rules. The plan would allow shareholders other than the suitor and related parties to buy additional shares at a 50% discount to the prevailing market price, with one right to a share attached to each issued and outstanding Sierra Metals share.

The rights plan is already in effect, though Sierra Metals said it remains subject to ratification by shareholders and the approval of the Toronto Stock Exchange.

Last week, the company said a majority of its shareholders had committed not to accept any formalized takeover offer from Peru's Alpayana. Alpayana has said it plans to make an all-cash offer directly to Sierra Metals shareholders valuing the Canadian company at roughly 179 million Canadian dollars (U.S.$124.2 million).

Family-controlled Alpayana, which is seeking to buy Sierra Metals at C$0.85 a share, has been circling for months. It made a non-binding offer to the company at the start of 2023 that it later dropped when Sierra Metals' share price rose. Alpayana has said a tie-up would bolster Sierra Metals balance sheet and address its debt, while tackling what it criticizes as a lack of scale.

Sierra Metals, which operates the Yauricocha Mine in Peru and Bolivar Mine in Mexico, said shareholders holding more than half of its shares have rejected the proposed bid as too low. It has pledged to review a formal offer if it is received, and to consider other strategic options to maximize long-term value.

Sierra Metals shares have risen almost 30% so far this month, and are up 12% year-to-date, closing last week at C$0.84.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

December 30, 2024 09:30 ET (14:30 GMT)

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