On Wednesday, Rio Tinto, the world’s second-largest mining company, announced plans to acquire U.S. lithium producer Arcadium for $6.7 billion. The company stated that the transaction would involve an all-cash offer of $5.85 per share, which represented a 90% premium over Arcadium’s closing price of $3.08 per share on October 4.
According to LSEG data, Arcadium Lithium’s market value was around $4.56 billion, with shares increasing by 37% that week. In premarket trading on Wednesday, the shares rose by 30% to $4.50 as of 4:00 a.m. ET. Meanwhile, Rio Tinto’s shares listed in London dipped by 0.5% in early trading that day and had fallen 5% so far that week.
The announcement followed earlier reports indicating that the two companies were in discussions. If the acquisition proceeded, Rio Tinto would become one of the largest lithium suppliers in the industry, trailing only Albemarle and SQM.
Jakob Stausholm, the CEO of Rio Tinto, remarked that the acquisition marked a significant advancement in the company’s long-term strategy. He noted that it would enable Rio Tinto to develop a world-class lithium business alongside its leading aluminum and copper operations, supporting the energy transition.
Paul Graves, the CEO of Arcadium Lithium, expressed confidence that the offer reflected a full and fair long-term value for the business, helping to reduce shareholders’ exposure to market volatility and the risks associated with their development portfolio.
This move was seen as part of a broader trend among mining companies seeking to secure essential minerals for the global energy transition. Lithium prices had been under pressure due to oversupply from China, with benchmark prices for 99.2% lithium carbonate reportedly falling over 20% year-to-date to approximately $10,800 per metric ton, according to FactSet data.
Graves added that the acquisition would provide Arcadium with opportunities to accelerate and expand its strategic initiatives for the benefit of its customers, employees, and the communities it served.
This transaction came after a failed merger earlier in May, when BHP Group decided not to make a firm offer for Anglo American after the latter rejected a request to extend discussions. That proposed merger aimed to create a dominant entity in copper mining to capitalize on the metal’s crucial role in the green energy transition.
In a note released prior to the acquisition announcement, analysts from CreditSights, led by Wen Li, suggested that mergers and acquisitions could be a more effective way for Rio Tinto to gain exposure to lithium compared to investing billions in high-risk greenfield projects. They noted that the deal would allow Rio Tinto to enhance its lithium assets and expand through brownfield investments.
