Shares in lithium project developer Liontown Resources have jumped nearly 70 per cent after it disclosed US company Albemarle Corporation had submitted three takeover proposals.
Shares in lithium project developer Liontown Resources have jumped nearly 70 per cent after it disclosed US company Albemarle Corporation had submitted three takeover proposals.
Albemarle’s latest indicative proposal was pitched at $2.50 per share.
The news put a rocket under Liontown’s share price, which jumped 68.5 per cent to $2.57, implying the market expects Albemarle to return with a higher bid.
Liontown also revealed Albemarle had submitted two earlier takeover proposals, pitched at $2.35 per share on March 3 2023 and $2.20 per share on October 20 2022.
Neither was disclosed to the market.
It also said today that an Albemarle subsidiary, RT Lithium, had accumulated a 2.2 per cent stake through on-market purchases.
This stake, combined with some unusual trading patterns and increasing market chatter, was believed to be a key factor in Liontown’s decision to disclose the latest indicative proposal but not the earlier ones.
Albemarle confirmed today it had accumulated a “less than 5 per cent stake” in Liontown but did not provide details.
Liontown’s board, led by long-serving chairman and 15 per cent shareholder Tim Goyder, has rejected the latest proposal, saying it substantially undervalued the company.
The proposal valued Liontown at about $5.5 billion, with Mr Goyder's stake worth about $840 million.
Combined with his shares in other companies, notably Chalice Mining, and the proceeds from big shares sales over recent years, Mr Goyder is now ranked as the country's newest billionaire.
Liontown is set to be Western Australia’s next major producer of spodumeme (aka lithium) concentrate, with its Kathleen Valley project under construction in the northern Goldfields.
Albemarle already has a major presence in the WA market, as the 49 per cent owner of the giant Greenbushes mine and 85 per cent owner of the Kemerton lithium refinery, under construction.
It also has a joint venture with Mineral Resources, giving it a 50 per cent stake in the Wodgina mine.
“Albemarle believes the addition of Liontown and its team would advance its strategy to produce a sustainable, high-quality supply of battery grade materials to support the clean energy transition,” the US company said in a statement.
Albemarle added that Liontown’s board has “not meaningfully engaged with Albemarle” on the latest proposal.
“Albemarle believes this is a compelling opportunity for Liontown shareholders and that Liontown’s board should immediately engage with Albemarle to facilitate a binding offer to be put to its shareholders for their consideration,” the company said.
In rejecting the latest proposal, Liontown claimed the timing was opportunistic, coinciding with recent softness in companies exposed to the lithium sector and the pre-production status of the Kathleen Valley project.
Albemarle’s counter is that the latest proposal is pitched at a 69 per cent premium to the 30-day average share price.
Liontown cited several other factors in rejecting the proposal.
It noted there are few other lithium assets of the scale, quality and mine life of Kathleen Valley that are close to production in Australia.
Liontown also claimed to have significantly de-risked the Kathleen Valley project in recent months, with mining operations commencing and construction progressing to schedule.
However, this comes just two months after Liontown announced a near doubling in the cost of building Kathleen Valley, to $895 million.
As a result of the cost increase, it will need to raise additional funds to complete the project.
Liontown has engaged Greenhill & Co as financial adviser and Allens as legal adviser.
Albemarle has hired JP Morgan and Corrs Chambers Westgarth as advisers.
The Liontown takeover news boosted the share price of several other lithium stocks today.
Core Lithium closed up 15 per cent, Allkem closed 13 pr cent higher and Pilbara Minerals finished 12 per higher.
