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Why Albemarle walked away

Albemarle Liontown

There’s enough coincidence to understand some of Albemarle Corporation’s decision to abandon its Liontown Resources takeover bid.

Albemarle said “growing complexities associated with the transaction” were a factor in its withdrawal.

This came shortly after Albemarle requested an extension to its four-week due diligence period, with Liontown granting a further seven days until October 19.

Perhaps more indicative of Albemarle’s backflip has been Gina Rinehart’s growing advances. Hancock Prospecting increased its Liontown shareholding to 19.9 per cent last week, growing from a 7.72 per cent ownership base in mid-September.

In becoming Liontown’s largest shareholder, Hancock said it looked forward to having a “prominent influence on Liontown’s future”.

Perhaps Albemarle decided to walk away on merit, with its due diligence process uncovering some complications within Liontown.

Before Liontown gets its Kathleen Valley project into production, it requires $450 million of funding in the near-term as part of a larger $951 million needed to cover the project’s capital costs.

In a late-September release to shareholders, Liontown said it was well advanced in discussions with a lender syndicate to support this funding, with a solution expected to be announced by the end of 2024.

Liontown expects to bring Kathleen Valley into production by mid-2024.

Albemarle’s sudden withdrawal has come as a surprise, especially considering the company’s takeover bid has carried on for the better part of seven months, with Albemarle most recently increasing its Liontown offer to $3.00-per-share on September 4.

This may suggest Rinehart’s stature has been significant, and it will be intriguing to see what comes of it. Liontown will be hoping Hancock’s major shareholding doesn’t impede its strategic direction, with a long-stood dream of becoming a lithium producer so close to fruition.

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