Six months ago, Liontown chief executive officer Tony Ottaviano said Albemarle’s $5.5 billion takeover offer was “ballparks away”. Today, a revised $6.6 billion offer was enough to sway Liontown’s board.
Albemarle, the world’s largest lithium producer, has been trying to add the Liontown feather to its cap since October 2022 when it attempted an offer of $2.20 per share. This was followed by a flurry of offers in March, one at $2.35 per share, the other $2.50. Both were rejected.
But today it seems that $3.00 per share, or $6.6 billion in total, is the magic number for the deal. Liontown’s board has unanimously recommended that shareholders accept the new offer.
This means that company chairman and majority stakeholder Tim Goyder has also backed the deal.
Liontown’s Kathleen Valley lithium project is at the centre of the takeover.
Recently, the project has been gearing up for first spodumene concentrate production in mid-2024.
The company handed out a $1 billion underground mining contract in August, marking a major milestone in the project’s maturity.
Just weeks earlier, the company also pulled the trigger on a direct shipping ore (DSO) strategy, which involves the early sale of an unprocessed form of lithium with an approximate one per cent grade.
Even in an unrefined form, there is an enormous global demand for lithium amongst automakers, battery producers, and cathode suppliers and refiners.
Liontown CEO Tony Ottaviano said DSO production would not only provide early revenue, but also enables the company to de-risk the project by field testing on a smaller scale.
Ottaviano solved another of Liontown’s problems in the same week. The project was facing a $300 million funding shortfall, but a conglomeration of finance companies and banks from Australia, Korea and the US have signed on to bridge the gap. No deal has yet been inked, but it would resolve one of the final hurdles for the Tier 1 battery metals mine.
It has been a long road for Liontown, from a $0.20 per share price in 2019 to a soaring $2.90 high today.
Now that Albemarle has submitted its best and final offer, Liontown shareholders will decide the company’s fate.