One of the world’s largest lithium producers has sparked a resurgence in dwindling lithium stocks after it lobbed an audacious $5.5 billion takeover bid at West Australia’s Liontown Resources, an offer the miner’s board has promptly rejected.
New York-listed chemicals giant Albemarle said on Tuesday it would pay $2.50 a share for Liontown, valuing the company at $5.5 billion, after building a 2.2 per cent stake in Western Australian minnow miner through its subsidiary RT Lithium.
Liontown called the timing of Albemarle’s bid “opportunistic”.Credit:Bloomberg
The fresh bid – Albemarle has taken two previous tilts at Liontown – sent shares in the miner soaring 50 per cent in early trade to $2.26, as investors digested details of the proposed buyout via a scheme of arrangement.
“The Liontown board and its advisers carefully considered the indicative proposal and unanimously
determined that it substantially undervalues Liontown, and therefore is not in the best interests of
shareholders,” the company told the ASX in a statement.
Liontown called the timing of the $US26 billion ($40 billion) lithium producer’s bid “opportunistic” given the “recent softness in companies exposed to the lithium sector”.
It said it had significantly de-risked its key Kathleen Valley lithium project, which has been weighing on its share price, with mining operations commencing, construction progressing, and the project remaining on track to deliver in mid-2024.
“Liontown continues to progress a number of attractive funding options for the remaining capital at the
Kathleen Valley Lithium Project and expects to update the market on this front in the near term,” it said.
The scarcity of comparable lithium projects – there are few other assets of its scale, quality and mine life – and the possibility of early revenue from the direct shipping or ore, make it one of the most attractive lithium projects around, Liontown’s board said.
Australia is the world leader of lithium production, digging up an estimated 61,000 metric tons each year, followed by Chile and China.
Lithium has shot to prominence over the past decade as a key ingredient for electric vehicle batteries and both car manufacturers and producers are scrabbling to carve out holdings of the valuable resource. Last year, Liontown nabbed Elon Musk’s Tesla as a foundation customer for its mine in a five-year deal that sent its share price soaring more than 15 per cent.
Albemarle’s bid was subject to conditions – including Liontown providing exclusive due diligence, the board’s unanimous approval, and regulatory approval – before it would become binding. Its previous non-binding proposals were made on March 3 at $2.35 a share and on October 20, 2022, at $2.20 a share.
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