- Rio Tinto (NYSE:RIO) will acquire Arcadium Lithium (NYSE:ALTM) for US$6.7 billion or US$5.85 per share in cash
- The valuation represents a 90 per cent premium to Arcadium’s closing price of US$3.08 per share on Oct. 4
- Arcadium is a global lithium company focused on lithium extraction, including hard-rock mining, conventional brine extraction and direct lithium extraction, as well as lithium chemicals manufacturing for high-performance applications
- Arcadium Lithium stock last traded at US$4.24 per share
Rio Tinto (NYSE:RIO) will acquire Arcadium Lithium (NYSE:ALTM) for US$6.7 billion or US$5.85 per share in cash, representing a 90 per cent premium to the closing price of US$3.08 on Oct. 4.
The combined companies will represent the world’s largest lithium resource base and make Rio Tinto one of the top lithium producers globally.
As previously reported on Stockhouse, the acquisition will add a value-accretive business to the mining giant’s portfolio, which already spans 35 countries and eight commodities. Key catalysts behind the transaction include:
- Arcadium’s vertically integrated lithium chemicals production, backed by long-term blue-chip customer relationships, with current annual production capacity of 75,000 tons of lithium carbonate equivalent.
- Arcadium’s growing global presence driven by long-life, low-cost operations and projects positioned to more than double production capacity by the end of 2028.
- Rio Tinto’s strong balance sheet, with growth capital to develop Arcadium’s asset base expected to represent only 5 per cent of capital expenditures of up to US$10 billion across 2025 and 2026.
The acquisition is also aligned with rising lithium demand, which is expected to post a more than 10 per cent compound annual growth rate through 2040, according to Benchmark Mineral Intelligence‘s supply and demand forecast as of September 2024. This runway offers Rio Tinto exposure to “substantial long-term market and portfolio upside, underpinned by an appealing market structure and established jurisdictions,” according to Wednesday’s news release.
The transaction is expected to close in mid-2025, subject to the approval of Arcadium shareholders. A majority in number of shareholders present and voting, representing at least 75 per cent of the voting rights of all shares voted, will be required to complete the transaction.
Leadership insights
“Acquiring Arcadium Lithium is a significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside our leading aluminium and copper operations to supply materials needed for the energy transition,” Jakob Stausholm, Rio Tinto’s chief executive officer, said in a statement. “Arcadium Lithium is an outstanding business today and we will bring our scale, development capabilities and financial strength to realize the full potential of its Tier-1 portfolio. This is a counter-cyclical expansion aligned with our disciplined capital allocation framework, increasing our exposure to a high-growth, attractive market at the right point in the cycle.”
“We look forward to building on Arcadium Lithium’s contributions to the countries and communities where it operates, drawing on the strong presence we already have in these regions,” Stausholm added. “Our team has deep conviction in the long-term value that combining our offerings will deliver to all stakeholders.”
“We are confident that this is a compelling cash offer that reflects a full and fair long-term value for our business and de-risks our shareholders’ exposure to the execution of our development portfolio and market volatility,” commented Paul Graves, Arcadium Lithium’s CEO. “Arcadium Lithium is a leading global lithium producer with the widest offering of lithium chemical products and a world-class manufacturing network, backed by a broad technology portfolio and expertise in all aspects of the lithium value chain. This agreement with Rio Tinto demonstrates the value in what we have built over many years at Arcadium Lithium and its predecessor companies, and we are excited that this transaction will give us the opportunity to accelerate and expand our strategy, for the benefit of our customers, our employees and the communities in which we operate.”
About Arcadium Lithium
Arcadium is a global lithium company focused on lithium extraction, including hard-rock mining, conventional brine extraction and direct lithium extraction, as well as lithium chemicals manufacturing for high performance applications.
Arcadium Lithium stock (NYSE:ALTM) last traded at US$4.24 per share.
Join the discussion: Find out what everybody’s saying about Rio Tinto’s acquisition of Arcadium Lithium on the Arcadium Lithium PLC Bullboard and check out the rest of Stockhouse’s stock forums and message boards.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.
(Top photo of Arcadium Lithium’s Sal de Vida project in Catamarca, Argentina: Arcadium Lithium)
