A major industry move has occurred with Rio Tinto, one of the world’s largest miners, signing a deal to buy Arcadium Lithium, a lithium producer in the U.S., for $6.7 billion. This is an all-cash deal where Rio Tinto will be offering $5.85 per share, proving to be an amazing 90 percent over the price that Arcadium was closing at $3.08 on October 4.
According to LSEG data, Arcadium Lithium’s market capitalization stands at around $4.56 billion and advanced 37% this week over acquisition news. Should this deal come to pass, Rio Tinto will be poised to become one of the biggest lithium sellers across the world, with only Albemarle and SQM ahead of it.
According to the CEO of Rio Tinto, Jakob Stausholm, this is a very important milestone for the company in its effort to establish a lithium production business that is complementary to its large aluminum and copper operations and which will cater to the anticipated strong demand for the materials that will be required in the energy transition process.
As a reaction, the CEO of Arcadium Lithium, Paul Graves, reported his belief that the joint cash offer is reasonable in terms of its long-term possibilities to maintain the value and to minimize the risks for the shareholders due to fluctuations in the market as well as the realization of the company’s development prospects.
This comes as mining firms seek crucial minerals required in the transition to cleaner sources of energy. This would seem to imply a long-term strategic vision of some new acquisitions to strengthen perhaps supply chains, even as lithium prices continued to experience pressure from supply side feeds from China.
Graves mentioned that through this merger Arcadium would be able to scale its strategy faster, to the advantage of customers, employees, and the communities where they are located.
Stay tuned for updates on this story.
