The Rio Tinto Ltd. sales space on the opening day of the Investing in African Mining Indaba in Cape City, South Africa, on Monday, Feb. 6, 2023.
Dwayne Senior | Bloomberg | Getty Pictures
The world’s second-largest miner Rio Tinto mentioned Wednesday it should purchase U.S. lithium producer Arcadium for $6.7 billion.
Rio Tinto mentioned the deal could be an all-cash transaction for $5.85 per share, representing a premium of 90% to Arcadium’s Oct. 4 closing worth of $3.08 per share.
Arcadium Lithium’s market worth at the moment stands at $4.56 billion, in accordance with LSEG information, with shares rallying 37% to date this week. Rio Tinto’s London-listed shares dipped 0.5% in early offers Wednesday and have fallen 5% to date this week.
Information of the transaction confirms an announcement earlier this week that the 2 firms have been in talks. If the deal goes by way of, Rio Tinto will turn into one of many largest suppliers of lithium, trailing solely after Albemarle and SQM.
Rio Tinto CEO Jakob Stausholm mentioned the acquisition is a “important step ahead in Rio Tinto’s long-term technique, making a world-class lithium enterprise alongside our main aluminium and copper operations to produce supplies wanted for the vitality transition.”
Arcadium Lithium CEO Paul Graves mentioned his agency was “assured that this can be a compelling money supply that displays a full and truthful long-term worth for our enterprise and de-risks our shareholders’ publicity to the execution of our improvement portfolio and market volatility.”
The transfer comes as mining firms search to safe important minerals for the worldwide vitality transition. Lithium costs have been below strain because of Chinese language oversupply. Costs of the benchmark 99.2% lithium carbonate have fallen over 20% year-to-date to $10,800 per metric ton, FactSet information reveals.
Graves added that the deal would give the corporate “the chance to speed up and broaden our technique, for the advantage of our prospects, our staff, and the communities through which we function.”
In the identical sector in Could, a mega merger broke down after BHP Group mentioned it might not be making a agency supply for Anglo American, after the latter rejected a request to increase takeover talks. The bumper takeover proposal was a part of an effort to create a copper mining juggernaut and to capitalize on the bottom steel’s crucial position within the inexperienced vitality transition.
—CNBC’s Karen Gilchrist contributed to this text.
Correction: This story has been up to date with the right present market worth for Arcadium Lithium on the time of publication.