Mining Giant Rio Tinto to Buy Arcadium Lithium for $6.7 Billion

Mining Giant Rio Tinto to Buy Arcadium Lithium for $6.7 Billion | OilPrice.com

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Rio Tinto will buy Arcadium Lithium in an all-cash deal valuing the target company at $6.7 billion, as one of the world’s largest miners is boosting its position as a global leader in energy transition commodities.

Rio Tinto and Arcadium Lithium plc on Wednesday announced a definitive agreement under which Rio Tinto will acquire Arcadium in an all-cash transaction for US$5.85 per share.

The price in the transaction represents a premium of 90% to Arcadium’s closing price of $3.08 per share on 4 October 2024 and values Arcadium’s diluted share capital at about $6.7 billion.

With the deal, Rio Tinto will have its portfolio expanded with Arcadium’s world-class, complementary lithium business, “establishing a global leader in energy transition commodities”, from aluminum and copper to high-grade iron ore and lithium, Rio Tinto said.

Earlier this week, the mining giant confirmed that it had made an approach to Arcadium Lithium regarding a potential acquisition.

“The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed,” Rio Tinto said on Monday.

On Wednesday came the news of the definitive agreement, which expects the deal to close in the middle of 2025.

The transaction has been unanimously approved by both the Rio Tinto and Arcadium Lithium Boards of Directors.

Yet, there are key conditions to closing, including approval of Arcadium Lithium shareholders and the Royal Court of Jersey, as the deal will be implemented by way of a Jersey scheme of arrangement, plus receipt of customary regulatory approvals and other closing conditions.

Rio Tinto says that the timing of the transaction is right as it is confident in the long-term outlook for lithium, with more than 10% compound annual growth rate in lithium demand expected through to 2040 leading to a supply deficit.

“With spot lithium prices down more than 80% versus peak prices, this counter-cyclical acquisition comes at a time with substantial long-term market and portfolio upside, underpinned by an appealing market structure and established jurisdictions,” the mining giant said.

By Tsvetana Paraskova for Oilprice.com

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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.

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