Rio Tinto’s Bid for Arcadium Lithium

MELBOURNE (Reuters) – Rio Tinto has approached lithium producer Arcadium Lithium, with both parties confirming their discussions on Monday, though financial details were not disclosed.

Rio’s bid for Arcadium comes as miners are keen to secure critical mineral supplies essential for the global energy transition, amidst weeks of speculation regarding the deal.

Reuters reported on Friday that negotiations were underway, with Arcadium potentially valued between $4 billion to $6 billion or more.

Rio stated, “The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed.”

At Friday’s close, Arcadium’s market cap stood at $3.31 billion.

If successful, this acquisition would position Rio as one of the largest lithium suppliers globally, alongside Albemarle (NYSE:ALB) and SQM. Demand for lithium is expected to skyrocket later this decade due to the rise of lithium-ion batteries in electric vehicles and consumer electronics.

Blackwattle Investment Partners, a shareholder in Australia-based Arcadium, labeled the approach as “opportunistic,” arguing that an offer between $4 billion and $6 billion would fail to reflect the true value of the company.

The decline in lithium prices, partly attributed to Chinese oversupply, has contributed to a drop in Arcadium’s shares, which are down over 50% since January, making it a notable takeover target.

Blackwattle further stated, “If the management believes in the growth opportunity discussed during the recent Investor Day, a sale price should be nearer to $8 billion, and LTM should consider rejecting any opportunistic bid.”