Rio Tinto PLC ADR RIO has announced a definitive agreement to acquire Arcadium Lithium plc ALTM in an all-cash transaction valued at $6.7 billion.
What happened: The purchase price of $5.85 per share represents a 90% premium over Arcadium’s closing price on October 4, according to Wednesday’s press release.
At the time of writing, Arcadium was up 29.48% from Tuesday’s close, while Rio was trading 1.16% lower than the previous day’s close, according to Benzinga Pro.
The transaction will integrate Arcadium’s lithium business into Rio Tinto’s portfolio and position the company as a leader in energy transition products. Arcadium, a vertically integrated lithium chemical manufacturer, has an annual production capacity of 75,000 tonnes of lithium carbonate, with plans to double by 2028.
The acquisition comes at a time when Rio Tinto is engaged in heated discussions with the Serbian government over a proposal to ban lithium and borate mining, affecting Rio Tinto’s key mining projects in the country’s western region. There is a possibility of giving.
Serbia reinstated Rio Tinto’s license to develop what is to be Europe’s largest lithium mine in July, reversing a previous government decision that had been affected by environmental protests, Reuters reported on Monday.
The $2.4 billion Jadar lithium project is expected to meet 90% of Europe’s current lithium demand and could establish Rio Tinto as a major player in the global lithium market.
Rio Tinto CEO Jakob Stausholm emphasized the strategic importance of the acquisition, saying it aligns with the company’s long-term goals and strengthens its lithium production capacity. Arcadium CEO Paul Graves expressed confidence in the deal, highlighting its potential to accelerate Arcadium’s growth strategy.
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The acquisition has been approved by both companies’ boards of directors and is expected to close by mid-2025, subject to shareholder and regulatory approvals. The strategic move comes as Rio Tinto aims to capitalize on the growing demand for lithium due to the global energy transition.
Why it matters: The acquisition of Arcadium Lithium is an important step for Rio Tinto in its aim to become a major player in the global lithium market. In early October, Rio Tinto expressed interest in acquiring Arcadium, a major supplier to Tesla, which sent Arcadium’s share price soaring. The acquisition will make Rio Tinto one of the world’s largest lithium producers, behind industry giants such as Albemarle and SQM.
In June, Rio Tinto announced plans to launch Europe’s largest lithium project in Serbia by 2028. The Jadar project has been suspended since 2022 and is expected to produce 58,000 tonnes of refined battery-grade lithium carbonate per year. The project is expected to supply 17% of Europe’s electric vehicle production needs, confirming Rio Tinto’s strategic focus on the lithium market.
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Disclaimer: This content was created in part with Benzinga Neuro, and was reviewed and published by Benzinga editors.
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