Sirius Minerals shares: is a possible 5.5p a share offer a good or bad deal for shareholders?

first_img Image source: Getty Images. Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Edward Sheldon, CFA | Monday, 13th January, 2020 | More on: SXX Simply click below to discover how you can take advantage of this. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Edward Sheldon, CFA Our 6 ‘Best Buys Now’ Sharescenter_img After a horror run in which they fell from above 20p to around 3.5p in less than nine months, Sirius Minerals (LSE: SXX) shares surged 45% last week on the back of news that the company is in ‘advanced discussions’ with FTSE 100 mining giant Anglo American regarding a possible takeover. The proposed deal, which would see Anglo American pay 5.5p per share for each SXX share, values Sirius at a little over $500m.Would this be a good deal for shareholders? I think it depends on how you look at it.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…5.5p is better than nothing One on hand, you could argue that the proposed 5.5p per share offer is a good deal. I say this because Sirius looked very close to going bust.With no funding in place, and only £180m in cash left as of September (about six months’ worth), the outlook for the company was not good at all. If it had gone bust, shareholders would most likely have lost everything (what was left of their original investments anyway). Receiving 5.5p per share is certainly better than receiving nothing.It’s also worth noting that, if you bought Sirius shares recently when they were trading near 3p, as my colleague Manika Premsingh did, then the proposed 5.5p per share deal is a great deal. You could make a huge gain in a short period of time if the deal goes through.A rough deal for long-term holdersOn the other hand, when you consider that many long-term shareholders will have paid over 20p (maybe even more than 40p) for their Sirius shares, the 5.5p per share proposed deal is not so good. In fact, it’s likely to be pretty painful for investors. If you paid 20p per share for your SXX shares, you could be forced to lock in a loss of more than 70%.I’ve been in this kind of situation before myself and it’s very frustrating. A little over 10 years ago, I owned shares in an oil exploration company whose share price crashed during the Global Financial Crisis. A larger company came in with an opportunistic bid, the oil explorer accepted the bid, and I was forced to lock in a loss of about 40%. So, I feel shareholders’ pain. What I’d do nowWondering what to do with your Sirius Minerals shares after news of the proposed offer?If you’re a long-term shareholder, I’d hold on to your SXX shares for now. While Sirius has advised that “there can be no certainty that any firm offer will be made,” it does sound like the company is keen to push the proposed deal through. “The Board of Sirius has indicated to Anglo American that it expects to be able to recommend a firm offer for Sirius if made by Anglo American at the price set out in the Proposal,” it said last week. Anglo American, too, sounds quite interested in a deal. It has until February 5 to make a firm offer.It’s certainly not an ideal situation if you’re a long-term holder, but as I said, receiving 5.5p if the deal goes through is better than receiving nothing if the company goes bust. 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