Title: Liontown Resources Soars as Albemarle Corporation Makes Refreshed $4.3 Billion Bid
Publication Date: September 4, 2021
By Scott Murdoch in Sydney and Poonam Behura
Shares of Australia’s Liontown Resources experienced a significant surge, shooting up by 11.5% as the lithium developer’s board backed a refreshed A$6.6-billion ($4.3-billion) bid from Albemarle Corp, the world’s largest producer of lithium.
The new cash offer of A$3 per share represents a premium of 14.5% to Liontown’s latest closing price, which stood at A$2.62 on September 1. This offer also exceeds Albemarle’s previous bid of A$2.50 per share made in late March, which was rejected by Liontown due to being too low.
The acquisition efforts stem from the increasing demand for lithium, a crucial component of electric vehicle batteries. Australian lithium companies are attracting attention due to their lower valuations and the necessity for securing reliable lithium supplies. The opportunity to invest in Liontown’s lithium deposits in Western Australia has become particularly appealing amid uncertainties surrounding the nationalization of the industry in Chile.
“The waiting game looks to have paid off,” according to Citigroup analysts, who believe the offer is a bullish signal for the lithium market. It indicates Albemarle’s eagerness to secure a premium supply or reflects a positive outlook on long-term lithium prices with low jurisdictional risk.
In response to the bid, Liontown’s shares soared to their highest level since July 14, reaching A$2.92.
Liontown’s board has expressed its intention to unanimously recommend that shareholders accept the new offer, assuming no superior proposal emerges. An independent expert’s report will be conducted to evaluate the deal further.
Albemarle has been granted a limited period of exclusive due diligence and has agreed to enter into a mutually acceptable scheme implementation deed, according to Liontown’s statement.
Liontown Resources controls two significant lithium deposits in Western Australia. The company’s flagship Kathleen Valley project, one of the world’s largest and highest-grade hard rock lithium deposits, is set to commence production by mid-2024. Furthermore, Liontown has secured supply agreements with major global players such as Ford Motor, Tesla, and LG Chem’s battery unit in South Korea.
Greenhill & Co and UBS will act as financial advisers, while Allens will serve as the legal adviser for Liontown in relation to the revised proposal. JPMorgan and Barrenjoey are advising Albemarle.
The increasing interest in Australian lithium companies, alongside the ongoing surge in buyouts, reflects the rising importance of lithium in the global transition towards electric vehicles and sustainable energy solutions.
($1=1.5504 Australian dollars)
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About the Author:
Scott Murdoch is an experienced journalist who has worked for Thomson Reuters and News Corp in Australia for over two decades. He specializes in financial journalism and covers equity and debt capital markets across Asia, as well as Australian M&A. Murdoch is currently based in Sydney.
Note: This article abides by the Thomson Reuters Trust Principles.