Sirius share price, which had been in freefall for the past year, is recovering after a £405m takeover by Anglo-American was announced Monday. Anglo-American has proposed a buyout of the struggling fertilizer and mining company that was once worth about £1.5billion in a deal which would see the continuation of crucial potash mining projects, including the Woodsmith potash mine. The mine had already consumed nearly a billion pounds in development. But with the project still short of nearly £2.97 billion, the cash-strapped Sirius was faced with a “stark choice” of either accepting the deal or face the prospect of liquidation, according to a statement by Sirius Chairman Russell Scrimshaw to the company’s investors.
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Sirius share price has been in freefall since August 2018. As at September 2019, the stock had erased 90% of its value from a year before. Prospects of liquidation could have sent the Sirius share price off the cliff, but the stock seems to have found some respite.
Sirius share price is now at 5.52 and is ticking upwards within the context of the rising channel. Immediate resistance is an intersection between the channel’s return line as well as the multi-year lows of 2011 – 2015 at 6.20. A break of this resistance could see Sirius share price registering further gains, which brings it into contact with the Feb 2016 lows/August 2019 highs at 10.49. 17.13 remains an additional upside target which will depend on a successful break of 10.49 with continued bullish momentum to be actualized.
On the flip side, an immediate resistance level exists at 3.59, which is where the channel’s lower border makes contact with the previous highs of Dec 2009/previous lows of Dec2019. Further below, a breakdown of the channel pattern could lead to more downside for the pair, especially if investor sentiment wanes. Such a move would target the March 2007 and August 2010 lows at 1.90.