Rio Tinto confirms Arcadium Lithium bid but investors wary of low-ball deal

[Pelican Press 0]

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Rio Tinto confirms Arcadium Lithium bid but investors wary of low-ball deal

Iron ore giant Rio Tinto has confirmed it is in talks to buy US battery metal miner Arcadium Lithium.

But as reported by The West *********** on Sunday, one influential shareholder of the US target is urging the board to not accept any low-ball offer.

It is understood Rio is offering a deal that values Arcadium at between $US4 billion ($5.9b) and $US6b. Shares of Arcadium jumped more than 30 per cent after first reports of a potential offer during after-market trading in New York late Friday.

Rio on Monday said it had made an approach regarding a potential acquisition.

“The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed,” it said in a statement to the *********** Securities Exchange.

“Rio Tinto will not make further comment until or unless an update is appropriate.”

A potential acquisition of Arcadium would be highly opportunistic and “require a significant premium to realise fair valuation for the business,” Tim Riordan and Michael Teran, portfolio managers at Blackwattle Investment Partners wrote in a letter to the board on Saturday.

Lithium stocks have suffered as prices of the battery metal have slumped with slower sales of electric vehicles.

Shares of Arcadium in the US tanked about 60 per cent this year through Thursday — more than those of peers including Albemarle and Pilbara Minerals.

“The timing of this potential ***** could not be at a more value destructive ******* for shareholders,” Mr Riordan and Mt Teran wrote, adding that the global lithium market appears to have bottomed and any ***** price should be near $US8b ($11.7b).

While the pair was “very excited” about the potential takeover, they said it had to happen with the right ********** and at the right time.

Speculation that Arcadium, which was formed through the merger of Allkem and Livent in January, had become a takeover target for Rio Tinto has been swirling for months.

Arcadium is dual-listed in *********** and the US.

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