Shares of Australia’s Liontown Resources (LTR.AX) experienced an 11.5% surge following the endorsement by the lithium developer’s board on Monday of a revised A$6.6 billion ($4.26 billion) bid from Albemarle Corp (ALB.N), the world’s largest lithium producer. The new cash offer of A$3 per share represents a 14.5% premium over Liontown’s closing price of A$2.62 on September 1 and is 20% higher than Albemarle’s previous A$2.50 per share offer from late March, which Liontown had previously rejected as insufficient.
Witnessing a wave of acquisitions
Liontown indicated that its board plans to unanimously recommend that shareholders approve the new offer, contingent on there being no superior proposal and pending the completion of an independent expert report to assess the deal. This news drove Liontown shares to surge by 11.5% to A$2.92, reaching their highest level since July 14.
Liontown also stated that Albemarle has been granted a limited period of exclusive due diligence and an opportunity to enter into a mutually acceptable scheme implementation agreement.
Emerging Lithium developers in Australia are witnessing a wave of acquisitions, driven by their lower valuations and the cash requirements that make them attractive to some of the world’s leading producers of battery materials and other potential buyers eager to secure lithium supplies.
The demand for lithium, a crucial component in electric vehicle batteries, has surged, making projects in Australia, a top supplier, more appealing than those in Chile, another major producer. In April, Chile outlined plans to nationalize its Lithium developer industry.
Liontown has enlisted Greenhill & Co. and UBS as financial advisers
Liontown Resources controls two significant lithium deposits in Western Australia, including its flagship Kathleen Valley project, which is set to commence production in mid-2024. This project ranks among the world’s largest and highest-grade hard rock lithium deposits.
Liontown has secured supply agreements with prominent companies such as Ford Motor, Tesla, and the battery division of South Korea’s LG Chem.
Albemarle’s most recent offer for Liontown marks its fourth attempt, with previous proposals of A$2.20 per share in October of the preceding year, A$2.35 per share in March, and the rejected A$2.50 per share offer, which became public.
Regarding the revised proposal, Liontown has enlisted Greenhill & Co. and UBS as financial advisers, with Allens serving as its legal adviser. JPMorgan and Barrenjoey are advising Albemarle.