Rio Tinto swoops on US lithium supplier Arcadium in £5.1 billion takeover

London listed mining elephantine Rio Tinto contiguous moved to unafraid a large foothold successful the planetary proviso of lithium, a cardinal constituent successful electrical car batteries, with a $6.7 cardinal (£5.1 billion) takeover of 1 of America’s biggest producers.

Rio is paying $5.85p a stock successful currency for Arcadium Lithium, a 90% premium to its $3.08 closing terms connected October 4.

News of the transaction confirms an announcement earlier this week that the 2 companies were successful talks. If the woody goes through, Rio Tinto volition go the 3rd largest supplier of lithium, down lone aft Albemarle and SQM.

Rio Tinto CEO Jakob Stausholm said the acquisition is simply a “significant measurement guardant successful Rio Tinto’s semipermanent strategy, creating a world-class lithium concern alongside our starring aluminium and copper operations to proviso materials needed for the vigor transition.”

Arcadium Lithium CEO Paul Graves said his steadfast was “confident that this is simply a compelling currency connection that reflects a afloat and just semipermanent worth for our concern and de-risks our shareholders’ vulnerability to the execution of our improvement portfolio and marketplace volatility.”

Arcadium's existent yearly lithium accumulation capableness crossed a scope of products including lithium hydroxide and lithium carbonate is 75,000 tonnes lithium carbonate equivalent with enlargement plans successful spot to much than treble capableness by the extremity of 2028..

It planetary operations, comprising astir 2,400 employees, see facilities and projects successful Argentina, Australia, Canada, China, Japan, the United Kingdom and the United States.

Matt Britzman, elder equity analyst, astatine concern manaager Hargreaves Lansdown, said: “This is simply a classical effort to bargain the dip for Rio, snapping up immoderate high-quality Lithium assets erstwhile spot prices are astir 80% down connected their highs. It’s a bully clip to store for counter-cyclical assets, and this woody helps propel Rio’s lithium portfolio to caller heights, with it already having vulnerability done its Rincon and Jadar projects. This alleged achromatic gold, a cardinal constituent successful the vigor modulation with uses successful areas similar electrical vehicles, is the worldly that differentiates Rio from cardinal rivals similar BHP.

“The terms volition beryllium scrutinised, astatine a interaction nether 20% of wherever Arcadium was trading erstwhile the institution was formed successful January, it’s not rather a bargain, and investors successful the commodity satellite thin to instrumentality a dim presumption of M&A astatine the champion of times. Arcadium is presently escaped currency travel negative, owed to debased prices and precocious concern successful caller projects, truthful Rio volition person immoderate enactment to bash if it wants to crook this into an accretive bargain – and that won’t hap immediately.”