Rio mentioned it will pay $5.85 per share for the U.S.-based lithium miner. That represents an virtually 90% premium to Arcadium’s closing worth of $3.08 per share on Oct. 3, the day earlier than Reuters completely reported on a possible deal between the 2 corporations.
Rio would achieve entry to lithium mines, processing services and deposits in Argentina, Australia, Canada and the USA to gasoline a long time of development, in addition to a buyer base that features automakers Tesla, BMW and Normal Motors.
Lithium costs have floundered attributable to Chinese language oversupply and a slowdown in electrical automobile gross sales, leading to miners of the steel rising as engaging takeover targets.
“This can be a counter-cyclical growth aligned with our disciplined capital allocation framework, growing our publicity to a high-growth, engaging market on the proper level within the cycle,” Rio CEO Jakob Stausholm mentioned in an announcement.
The deal would make Rio one of many largest producers of the battery making steel alongside Albemarle and SQM . Arcadium Chairman Peter Coleman mentioned the money supply would supply shareholders with “certainty and liquidity” and to keep away from ongoing dangers related to lithium market fluctuations. Arcadium shares have fallen greater than 37% because the begin of the 12 months, giving it a market capitalisation of $4.56 billion.
Jason Beddow, managing director at Australian fund supervisor Argo Investments, which owns shares in Rio, mentioned the deal made a whole lot of sense.
“Sure it is a large premium however shares have been offered off lots,” he mentioned.
Beddow, who visited the businesses’ Canadian operations in current weeks mentioned: “They’re each shut collectively geographically, they each use Quebec hydropower. Rio has a robust chemical compounds enterprise in Canada that this may slot into.”
The transaction, which has been unanimously permitted by the businesses’ boards, is predicted to shut in mid-2025.