MELBOURNE (Reuters) -Rio Tinto, has made an method to purchase lithium producer Arcadium Lithium, the 2 events stated in separate statements on Monday, with out revealing any monetary particulars.
Rio’s method to Arcadium comes as miners are desperate to safe provides of important minerals wanted to energy the worldwide vitality transition and comes after weeks of hypothesis over the deal.
Reuters solely reported on Friday that the businesses had been holding talks, and Arcadium may very well be valued at $4 billion to $6 billion or increased.
“The method is non-binding and there’s no certainty that any transaction shall be agreed to or will proceed,” Rio stated in its assertion.
Arcadium’s market cap was $3.31 billion at Friday’s shut.
If consummated, the deal would make Rio one of many world’s largest suppliers of lithium behind Albemarle and SQM. Demand for the ultralight steel is forecast to surge later this decade from development in lithium-ion battery use in electrical automobiles and shopper electronics.
Australia-based Arcadium shareholder Blackwattle Funding Companions known as the method “opportunistic” and stated that any supply of between $4 billion to $6 billion would “considerably undervalue” the lithium firm.
The latest hunch in lithium costs, which is due partially to Chinese language oversupply, has pushed Arcadium’s shares down greater than 50% since January, making it a lovely takeover goal.
“If the administration do imagine that the expansion alternative highlighted by the latest Investor Day is achievable, in our opinion, a sale value for LTM ought to be nearer to $8 billion, and LTM ought to be prepared to stroll away from an opportunistic supply,” it stated.
(Reporting by Himanshi Akhand and Surbhi Misra in Bengaluru; Modifying by Cynthia Osterman and Diane Craft)