Rio Tinto has officially confirmed its approach to Arcadium Lithium regarding a potential acquisition of the company. This announcement follows recent market speculation about the takeover.
In a statement, the world’s second-largest mining firm stated that “The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed”. However, Arcadium, with a reported market capitalisation of $4.46billion, confirmed it had been approached in a separate announcement, though neither company disclosed any financial specifics.
The deal would make Rio Tinto the third largest producer of lithium in the world, according to reports from Australia. Arcadium has operating resources in Argentina and Australia and downstream conversion assets in the US, China, Japan and the UK, as well as a portfolio of ongoing development projects in Argentina and Canada.
Shares of Arcadium Lithium surged in premarket trading on Monday after the company confirmed it has been approached by mining giant Rio Tinto regarding a potential acquisition. This interest comes as Rio Tinto seeks to enhance its lithium mining efforts, which are crucial for batteries in electric vehicles (EVs) and personal electronics like laptops and smartphones.
Arcadium Lithium Shares Soar on Rio Tinto Takeover News
Arcadium’s stock jumped approximately 30%, reaching $4.02, while Rio Tinto’s American depositary receipts (ADRs) saw a slight decline of 0.5% to $69.36. Both companies issued statements indicating that while discussions are ongoing, there is no certainty that a deal will be finalized.
The rise in Arcadium’s shares follows last week’s speculation about Rio Tinto’s interest in acquiring a lithium mining firm, which boosted several stocks in the sector. Arcadium has faced challenges recently, underperforming compared to its peers, which has fueled takeover speculation.
Rio Tinto is also working on plans to establish Europe’s largest lithium mine in Serbia, although these plans have encountered resistance from residents, attributed by CEO Jakob Stausholm to a “well-organized” disinformation campaign.
Since the beginning of the year, lithium stocks have struggled due to a significant drop in prices caused by oversupply and reduced demand from electric vehicle manufacturers.
Editor: Fulufhelo Lloyd Nedohe| Various sources
