Rio Tinto Ltd’s booth. during the opening day of the Indaba Africa Mining Investment Expo in Cape Town, South Africa, on Monday, February 6, 2023.
Senior Dwayne | Bloomberg | Getty Images
The world’s second largest mining company Rio Tinto said Wednesday it will acquire U.S. lithium producer Arcadium for $6.7 billion.
Rio Tinto said the deal will be an all-cash transaction for $5.85 per share, a 90% premium to Arcadium’s Oct. 4 closing price of $3.08 per share .
According to LSEG data, Arcadium Lithium’s market value currently stands at $4.56 billion, with shares up 37% this week. Rio Tinto’s London-listed shares fell 4.7% this week.
News of the transaction is confirmed an announcement earlier this week that the two companies are negotiating. If the deal goes through, Rio Tinto will become one of the largest lithium suppliers, behind only Albemarle and SQM.
Rio Tinto CEO Jakob Stausholm said the acquisition was a “significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside its aluminum and copper operations.” our head to supply the raw materials needed for the energy transition.”
Arcadium Lithium CEO Paul Graves said his company “believes this is an attractive cash offer that reflects the full long-term value of our business and minimizes risk.” to our shareholders as our portfolio progresses and markets fluctuate.”
The move comes as mining companies seek to secure minerals essential for the global energy transition. Lithium prices are under pressure due to China’s oversupply. FactSet data shows that the price of benchmark 99.2% lithium carbonate has fallen more than 20% year-to-date to $10,800/ton.
Graves added that the deal will give the company “the opportunity to accelerate and expand our strategy, for the benefit of our customers, employees and the communities in which we operate.”
In the same sector in May, a major merger collapsed after BHP Group said it would not make a firm offer for Anglo American, after the company rejected a request to extend talks. takeover judgement. The bumper takeover proposal is part of efforts to create a copper mining powerhouse and capitalize on the base metal’s vital role in the green energy transition.
—CNBC’s Karen Gilchrist contributed to this article.
Correction: This story has been updated with the correct current market value of Arcadium Lithium at the time of publication.
