A definitive agreement has been reached under which Rio Tinto (ASX:RIO) will acquire Arcadium Lithium (NYSE:ALTM) in an all-cash transaction for US$5.85 per share.
The transaction will be implemented by way of a Jersey scheme of arrangement and is expected to close in mid-2025.
Both the Rio Tinto and Arcadium Lithium boards have unanimously approved the deal.
The offer represents a premium of 90% to Arcadium’s closing price of US$3.08 per share on 4 October 2024, a premium of 39% to Arcadium’s volume-weighted average price (VWAP) since Arcadium was created on 4 January, and values Arcadium’s diluted share capital at about US$6.7 billion ($9.95 billion).
Goldman Sachs and JP Morgan are acting as financial advisors to Rio Tinto and Linklaters is lead legal advisor. Gordon Dyal & Co. is serving as lead financial advisor and UBS Investment Bank as financial advisor to Arcadium, while Davis Polk & Wardwell is legal counsel.
Rio Tinto CEO Jakob Stausholm says acquiring Arcadium is a significant step forward in the mining giant’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”.
The transaction will bring Arcadium’s complementary lithium business into Rio Tinto’s portfolio, establishing a player in energy transition commodities – from aluminium and copper to iron ore and lithium.
Arcadium’s current annual lithium production capacity across a range of products including lithium hydroxide and lithium carbonate is 75,000 tonnes lithium carbonate equivalent. It has expansion plans in place to more than double capacity by the end of 2028.
Comprising some 2,400 employees, global operations include facilities and projects in Argentina, Australia, Canada, China, Japan, the UK, and the US.
Rio’s CEO says this is a counter-cyclical expansion aligned with the company’s disciplined capital allocation framework, increasing exposure to a “high-growth, attractive market at the right point in the cycle”.
Arcadium CEO Paul Graves says the company is confident “this is a compelling cash offer that reflects a full and fair long-term value for our business”.
Write to Adam Orlando at Mining.com.au
Images: Rio Tinto
