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Rio mentioned it could pay $5.85 per share for the U.S.-based lithium miner. That represents an virtually 90% premium to Arcadium’s closing worth of $3.08 per share on Oct. 3, the day earlier than Reuters solely reported on a possible deal between the 2 companies.
Rio would acquire entry to lithium mines, processing amenities and deposits in Argentina, Australia, Canada and america to gas many years of development, in addition to a buyer base that features automakers Tesla, BMW and Common Motors. Lithium costs have floundered as a result of Chinese language oversupply and a slowdown in electrical car gross sales, leading to miners of the metallic rising as enticing takeover targets.
“It is a counter-cyclical enlargement aligned with our disciplined capital allocation framework, rising our publicity to a high-growth, enticing market on the proper level within the cycle,” Rio CEO Jakob Stausholm mentioned in an announcement.
The deal would make Rio one of many largest producers of the battery making metallic alongside Albemarle and SQM . Arcadium Chairman Peter Coleman mentioned the money provide would supply shareholders with “certainty and liquidity” and to keep away from ongoing dangers related to lithium market fluctuations. Arcadium shares have fallen greater than 37% for the reason that begin of the yr, giving it a market capitalisation of $4.56 billion.
Jason Beddow, managing director at Australian fund supervisor Argo Investments, which owns shares in Rio, mentioned the deal made plenty of sense.
“Sure it is a massive premium however shares have been bought off quite a bit,” he mentioned.
Beddow, who visited the businesses’ Canadian operations in latest weeks mentioned: “They’re each shut collectively geographically, they each use Quebec hydropower. Rio has a robust chemical substances enterprise in Canada that it will slot into.”
The transaction, which has been unanimously permitted by the businesses’ boards, is anticipated to shut in mid-2025.
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