Rio Tinto has agreed to acquire US-based lithium chemicals producer Arcadium Lithium in an all-cash deal that values the latter’s diluted share capital at around $6.7bn.
Under the terms of the definitive agreement, shareholders of Arcadium Lithium will receive $5.85 per share. The consideration represents a 90% premium on Arcadium Lithium’s closing share price of $3.08 on 4 October 2024.
Through the proposed acquisition, Rio Tinto aims to bolster its position in the energy transition sector by integrating Arcadium Lithium’s lithium operations into its existing portfolio.
Listed on the New York Stock Exchange, Arcadium Lithium has a vertically integrated business spanning lithium chemicals extraction and manufacturing. The company operates across multiple regions, including Argentina, Australia, Canada, China, and the US.
Currently, Arcadium Lithium’s annual production capacity is 75,000 tonnes of lithium carbonate equivalent, with plans to more than double this output by 2028.
Arcadium Lithium CEO Paul Graves said: “This agreement with Rio Tinto demonstrates the value in what we have built over many years at Arcadium Lithium and its predecessor companies, and we are excited that this transaction will give us the opportunity to accelerate and expand our strategy, for the benefit of our customers, our employees, and the communities in which we operate.”
According to Rio Tinto, its assets, when combined with Arcadium Lithium, will become the world’s largest lithium resource base. It is also expected to make Rio Tinto one of the leading lithium producers globally on a pro-forma basis.
In addition, the proposed deal is anticipated to complement Rio Tinto’s existing capabilities in key markets such as Argentina and Quebec, positioning the company as a major company in the lithium sector.
Besides, the transaction is projected to increase Arcadium Lithium’s production capacity by 130% by 2028 within Rio Tinto’s existing geographies.
Rio Tinto CEO Jakob Stausholm said: “Acquiring Arcadium Lithium is a significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside our leading aluminium and copper operations to supply materials needed for the energy transition.
“Arcadium Lithium is an outstanding business today and we will bring our scale, development capabilities and financial strength to realise the full potential of its Tier 1 portfolio.”
The deal has been unanimously approved by the boards of both companies.
Subject to shareholder and regulatory approvals along with other customary conditions, the transaction is anticipated to be completed by mid-2025.
For the transaction, Goldman Sachs and J.P. Morgan served as Rio Tinto’s financial advisers, with legal counsel provided by Linklaters.
Gordon Dyal & Co. and UBS Investment Bank are financial advisers to Arcadium Lithium, while Davis Polk & Wardwell is its legal counsel.
