Albemarle drops $6.6 billion bid for Liontown

After what has been a tense few weeks for investors, Albemarle Corporation (NYSE:ALB) has dropped its $6.6 billion bid for Liontown Resources (ASX:LTR).

In a statement on Sunday, at the tail end of a due diligence period that was extended last week, the world’s largest producer of lithium chemicals said “growing complexities associated with the transaction” were a factor in its decision.

“Our engagement with the Liontown team has been meaningful and productive,” Albemarle CEO Kent Masters said. 

“We appreciate the level of cooperation we have received, and we thank the entire team for their efforts. That said, moving forward with the acquisition, at this time, is not in Albemarle’s best interests.”

Albemarle submitted its proposal on 4 September, which sought a takeover price of $3 per share. It was a revised offer, after others going back as far as 20 October 2022 — which valued Liontown at $2.20, $2.35 on 3 March, and $2.50 on 27 March — were rejected.

It was shortly thereafter that mining magnate Gina Rinehart launched her own pursuit. Over the following months, Rinehart and her privately held Hancock Prospecting forked out roughly $1.3 billion to acquire a 19.9% stake in Liontown — broadly considered enough to block Albemarle’s offer.

As reported by last week,  Liontown Chairman and significant shareholder Tim Goyder said it was not unusual for due diligence extensions when evaluating transactions.

In a statement to the ASX this morning, Liontown said that in spite of the withdrawal, Albemarle had confirmed its “favourable view” of both the Kathleen Valley Lithium Project — which is on track to start production in mid-2024 — and Liontown management.

“Liontown is committed to delivering on its strategic plan and is confident in its ability to thrive independently,” the company said.

“The board of directors and leadership team maintains an absolute focus on delivering the flagship Kathleen Valley Lithium Project into production, maximising the full potential from Liontown’s assets including downstream potential, and, importantly, creating long-term value for all shareholders.”

Liontown entered a trading halt this morning, citing both Albemarle’s departure and a pending announcement about funding for the Kathleen Valley Project. The halt is due to be lifted on 18 September, or upon the release of the relevant announcement.

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Written By Oliver Gray
Originally from Perth, Oliver has a keen interest long-form journalism. He has written for a number of publications and was most recently Contributing Editor of The Market Herald’s opinion section, Art of the Essay.