West Australian lithium player Liontown Resources has opened the door to a $6.6 billion takeover by one of the world’s largest lithium producers, Albemarle, in what is shaping up as a big payday for the company’s investors.
Liontown on Monday told the market that it had received a sweetened $3-a-share proposal from the New York-listed chemicals giant Albemarle, with the minnow’s board ready to open its books to the suitor.
“Should Albemarle make a binding proposal at $3.00 per share, subject to agreement of a mutually acceptable
binding scheme implementation agreement, the intention of the Liontown board is to unanimously
recommend shareholders vote in favour of the proposal in the absence of a superior proposal and subject to
an independent expert concluding (and continuing to conclude) that the proposed transaction is in the best
interests of shareholders,” the board said in a statement.
Albemarle, which already holds a 2.2 per cent stake in Liontown through its subsidiary RT Lithium, had its original $2.50-a-share offer rejected in March.
The latest bid, Albemarle’s third in five months, is at a 15 per cent premium to Liontown’s closing share price on Friday. Its previous non-binding proposals were made on March 3 this year, at $2.35 a share, and on October 20 last year at $2.20 a share.
The takeover target’s shares soared on news of the revised offer, jumping more than 9 per cent to $2.86 in afternoon trading.
If successful, the deal would deliver a stunning return for Liontown’s faithful early shareholders. The miner listed on the ASX in 2018 at 3¢.
Liontown’s register is dominated by its chairman, Tim Goyder, who owns a 15 per cent stake in the miner. Another 20 per cent is reportedly in the hands of investors closely aligned to Goyder and the miner’s long-term vision.
Australia is the world leader of lithium production, digging up an estimated 61,000 metric tons a year, followed by Chile and China.
Liontown owns one of the most promising early-stage lithium projects in Australia, and has supply agreements with major automakers including Tesla and Ford.
Lithium has shot to prominence over the past decade as a key ingredient for electric vehicle batteries, and both car manufacturers and producers are scrambling to carve out holdings of the valuable resource.
Last year, Liontown nabbed Elon Musk’s Tesla as a foundation customer for its mine in a five-year deal that sent its share price soaring more than 15 per cent. Before that deal, it had signed up Korean battery manufacturer LG Energy Solution as its first customer.
Albemarle already owns some spodumene resources – a mineral from which lithium is derived – and conversion facilities at Greenbushes, Wodgina and Kemerton in Western Australia. The company has said that gaining control of Liontown would help it produce sustainable, high-quality battery-grade materials to underpin the clean energy transition.
Greenhill & Co and UBS are acting as financial advisers, while Allens is the legal adviser to Liontown.
With Simon Johanson and Bloomberg
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Source: Thanks smh.com