While Liontown Resources turned down an unsolicited $5.2 billion takeover bid from Albemarle Corporation, it begs the question: could another company come to the table?
While the $2.50-per-share offer is 63 per cent higher than Liontown’s closing share price on March 27, the near-term lithium producer deemed the bid “opportunistically timed” given the “recent softness” of companies exposed to the lithium sector and the pre-production status of Liontown’s Kathleen Valley project.
Liontown also believes the offer doesn’t reflect the company’s current upside, highlighting the significant de-risking that has occurred at Kathleen Valley in recent months, including the commencement of mining operations and Liontown’s mid-2024 first-production timeline.
Liontown highlighted several other reasons as well.
“(The offer doesn’t reflect) Liontown’s extensive growth optionality both at Kathleen Valley – including potential early revenue from direct shipping ore (DSO), the recently announced 20 per cent increase in plant throughput rate to 3Mtpa (million tonnes per annum), the direct future downstream participation, and other expansion opportunities being explored – and its broader portfolio including Buldania,” Liontown said.
Liontown also believes Kathleen Valley has “scarcity value” given there are few other lithium assets of its scale, quality and mine life this close to production in Australia.
The Australian Financial Review said Albemarle’s bid had incited a global search for counter-bidders, with bankers knocking on the door of companies such as Rio Tinto and Wesfarmers, which is developing its Mt Holland lithium project in WA.
As it looks to take control of Liontown, Albemarle has been building its stake in the company through on-market purchases. Albemarle subsidiary RT Lithium held a 2.2 per cent stake in Liontown shares based on the most recent share registry information.
Albemarle’s $2.50-per-share bid follows on from two prior bids in October 2022 and earlier in March, where the company proposed $2.20 per share and $2.35 per share, respectively.
The major lithium mining and chemicals company believes Kathleen Valley would complement its current suite of Australian lithium operations, where it holds stakes in the Greenbushes and Wodgina hard-rock mines in WA, and the Kemerton lithium hydroxide facility.
“Albemarle believes the addition of Liontown and its team would advance its strategy to produce a sustainable, high-quality supply of battery grade materials to support the clean energy transition,” Albemarle said in a press announcement.
“In addition to being highly compelling for Liontown shareholders, the ($2.50-per-share) proposal represents an exciting opportunity for Liontown, as well as its customers, employees and other stakeholders.
“Liontown has signed offtake agreements with three world-class partners in the battery and automotive sectors and Albemarle would look forward to continuing to partner with those leaders as the owner and operator of Liontown.”
Liontown soared more than 60 per cent off the back of the announcement, and was trading right on $2.50 when this article was first published.
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