Lithium developer Liontown backs Albemarle’s $4.3 billion bid

A sign on the access road leads to Albemarle's lithium evaporation ponds at its Silver Peak facility

An indication on the entry street results in Albemarle’s lithium evaporation ponds at its facility in Silver Peak, Nevada, U.S., January 9, 2019. Image taken January 9, 2019. Portal/Ernest Scheyder/File Picture Purchase License Rights

Sept 4 (Portal) – Shares in Australia’s Liontown Sources (LTR.AX) rose 11.5% after the lithium developer’s board on Monday accepted a renewed supply from Albemarle Corp (ALB.N) of 6.6% billion Australian {dollars} (4.3 billion US {dollars}) had supported the world’s largest producer of battery supplies.

Rising Australian lithium corporations are seeing a surge in takeovers as their decrease valuations and lowered money wants appeal to among the world’s largest lithium producers and others wrestle to safe provides.

The brand new money supply of A$3 per share represents a 14.5% premium to Liontown’s earlier closing value of A$2.62 on September 1 and is 20% larger than Albemarle’s supply of A$2.50 per share on the finish of March , which had additionally rejected the goal low.

“The wait seems to have paid off,” Citigroup analysts stated.

“We view provide for lithium as bullish, signaling that the most important producer is curious about securing extra provide at a premium or has a bullish view of the long-term value with little jurisdictional threat.”

The supply was Albemarle’s fourth, having provided A$2.20 per share on October 20 final yr and A$2.35 per share in March, earlier than asserting its rejected supply of A$2.50.

Monday’s information pushed Liontown shares to their highest degree since July 14, at A$2.92.

Liontown stated its board intends to unanimously advocate that shareholders vote in favor of the brand new supply, absent a greater proposal and upon completion of an unbiased skilled report reviewing the deal.

Albemarle has been granted a restricted time period to conduct unique due diligence and enter right into a mutually acceptable settlement to implement this system, Liontown stated in a press release.

Lithium is in excessive demand for electrical automobile batteries, and initiatives in key provider Australia have turn out to be extra engaging than these in different main producer Chile, which unveiled a plan to nationalize its trade in April.

Liontown controls two main lithium deposits in Western Australia. Preliminary manufacturing is anticipated to happen in mid-2024 at its flagship Kathleen Valley mission, which is likely one of the largest and highest high quality exhausting rock lithium deposits on the planet.

Liontown additionally has provide contracts with Ford Motor (FN), Tesla (TSLA.O) and the battery division of South Korea’s LG Chem (051910.KS).

Liontown stated Greenhill & Co and UBS would act as monetary advisers and Allens would act as authorized advisers on the revised proposal. JPMorgan and Barrenjoey advise Albemarle.

($1=1.5504 Australian {dollars})

Reporting by Scott Murdoch in Sydney and Poonam Behura; Edited by Christopher Cushing and Clarence Fernandez

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Scott Murdoch has been a journalist for greater than twenty years, working for and Information Corp in Australia. He has specialised in monetary journalism for many of his profession, masking the Asian fairness and debt capital markets and Australian M&A. He’s primarily based in Sydney.