MW Rio Tinto strikes $6.7 billion deal to buy Arcadium Lithium

By Steve Goldstein

Miner says acquisition complements its copper and aluminum operations

Rio Tinto on Wednesday struck a deal to acquire Arcadium Lithium for $6.7 billion, as the global miner extends its operations in another commodity needed for the energy transaction.

Terms call for Rio Tinto $(RIO)$ (UK:RIO) (AU:RIO) to pay $5.85 per share, in cash, for each Arcadium share (ALTM) AU:LTM, which is a 90% premium to the price on Oct. 4, when news first surfaced of Rio Tinto's interest.

It's a premium of 39% to Arcadium's volume-weighted average price this year.

"Acquiring Arcadium Lithium is a significant step forward in Rio Tinto's long-term strategy, creating a world-class lithium business alongside our leading aluminum and copper operations to supply materials needed for the energy transition," said Rio Tinto CEO Jakob Stausholm in a statement.

Arcadium Lithium's chief executive, Paul Graves, called it a "full and fair" long-term value for its business.

Rio Tinto said it expects to establish world-class lithium hubs in Argentina and Quebec and become a market leader in lithium processing. It expects the 10% annual growth rate projected for lithium to lead to a supply deficit.

"With spot lithium prices down more than 80% versus peak prices, this counter-cyclical acquisition comes at a time with substantial long-term market and portfolio upside, underpinned by an appealing market structure and established jurisdictions," said Rio Tinto.

Rio Tinto said the combined company will have the second-highest capacity compared to rivals including Albemarle Corp. $(ALB)$, SQM $(SQM)$, Pilbara Minerals (AU:PLS), Mineral Resources (AU:MIN) and Lithium Americas (CA:LAC).

-Steve Goldstein

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October 09, 2024 03:19 ET (07:19 GMT)

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