Lithium miner Arcadium confirms Rio Tinto’s takeover approach

MELBOURNE (Reuters) – Rio Tinto has made an approach to buy lithium producer Arcadium Lithium, the two sides said in separate statements on Monday, without disclosing financial details.

Rio’s approach to Arcadium comes as miners are eager to secure supplies of essential minerals needed to power the global energy transition and comes after weeks of speculation over the deal.

Reuters exclusively reported on Friday that the companies were in talks and Arcadium could be valued at between $4 billion and $6 billion or more.

“The approach is not binding and there is no certainty that any transaction will be agreed or proceed,” Rio said in its statement.

Arcadium’s market capitalization was $3.31 billion at Friday’s close.

If completed, the deal would make Rio one of the world’s largest lithium suppliers, behind Albemarle and SQM. Demand for the ultralight metal is expected to increase later this decade due to increased use of lithium-ion batteries in electric vehicles and consumer electronics.

Arcadium’s Australia-based shareholder Blackwattle Investment Partners called the approach “opportunistic” and said any bid between $4 billion and $6 billion would “significantly undervalue” the lithium company.

The recent slide in lithium prices, which is partly due to oversupply in China, has pushed Arcadium shares down more than 50% since January, making it an attractive takeover target.

“If management believes the growth opportunity highlighted at the recent Investor Day is achievable, in our view, a sale price for LTM should be closer to $8 billion, and LTM should be willing to forego an offer opportunist”, they say. said.

(Reporting by Himanshi Akhand and Surbhi Misra in Bengaluru; Editing by Cynthia Osterman and Diane Craft)