Albemarle 4.3Billion Dollars Bid: Australian lithium developer Liontown Resources (LTR.AX) saw a significant surge in its stock price, rising by 11.5% after its board announced support for a refreshed bid from Albemarle Corp (ALB.N), the world’s largest producer of battery materials.
This renewed bid, valued at A$6.6 billion ($4.3 billion), has garnered attention as part of a trend of emerging Australian lithium companies attracting buyouts due to their comparatively lower valuations and cash needs. This strategy has enticed major lithium producers and other players in the market looking to secure future supplies.
Albemarle’s A$3 per share offer is 14.5% higher than Liontown’s September 1st closing price of A$2.62. This latest offer is 20% greater than Albemarle’s previous offering of A$2.50 per share, which Liontown rejected in March due to its perceived inadequacies.
Citigroup analysts said Liontown’s waiting game paid off and that the enhanced offer is bullish for the lithium market. It shows that the largest lithium producer wants to secure extra supply at a premium, which could lead to low jurisdictional risk lithium prices in the long run.
Albemarle launched its fourth proposal for Liontown, starting at A$2.20 per share in October and rising to A$2.35 in March. The rejected A$2.50 bid was revealed. The newest bid drove Liontown shares to A$2.92, their highest level since July 14.
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Liontown Resources said its board will unanimously support the revised offer to shareholders if no better offer comes.
The board will also study a deal-analysis report by an independent expert. Liontown said Albemarle had a short window for exclusive due diligence and the possibility of a mutually agreeable scheme implementation deed.
Lithium is popular for electric vehicle batteries. Thus, lithium projects in Australia, a prominent provider, are more tempting than those in Chile. Chile planned to nationalize its lithium business in April. Liontown controls two large Western Australian lithium resources. Kathleen Valley, one of the world’s largest and highest-grade hard rock lithium resources, will begin production in mid-2024.
Liontown has supply agreements with Ford Motor (F.N.), Tesla (TSLA.O), and L.G. Chem’s battery unit (051910. K.S.) in South Korea. Liontown has hired Greenhill & Co. and UBS as financial advisors and Allens as legal advisors for the updated plan.
In contrast, JPMorgan and Barrenjoey advise Albemarle. This increased interest in Liontown and the growing pattern of buyouts show how lithium market participants strategically position themselves in the fast-growing electric vehicle sector.