Albemarle Corporation has confirmed that it will be working toward the execution of a binding agreement to acquire Australia-based battery minerals company Liontown Resources Limited; the Revised Proposal values Liontown at A$6.6 billion or US$4.32 billion on an equity value basis.
In March, Liontown Resources, an emerging battery minerals producer based in Australia, rejected an unsolicited, conditional and non-binding indicative proposal from Albemarle Corporation, in which Albemarle would acquire all of the shares in Liontown at a price of A$2.50 per share—valuing the company at approximately US$3.7 billion. That proposal represented a 63.9% premium to the ASX-listed company’s last close at the time.
Albemarle now says that it submitted a best and final non-binding proposal, in the absence of a superior proposal, to acquire all outstanding shares of Liontown by way of scheme of arrangement for A$3.001 cash per share.
The revised proposal is subject to several conditions, including:
- Satisfactory completion of confirmatory due diligence by Albemarle;
- Entry into a binding scheme implementation deed (SID) that will be subject to closing conditions, including obtaining Australian regulatory approvals and Liontown shareholder approval; and
- Final Albemarle board approval to enter into the proposed transaction on a binding basis.
Pending successful due diligence and negotiation of a binding SID, the proposed acquisition of Liontown would:
- Enhance the scale of Albemarle’s Energy Storage business and build on Albemarle’s world-class resource base;
- Expand Albemarle’s strong position in Australia, where the company has significant expertise, including world-class spodumene resources and lithium conversion facilities at Greenbushes and Wodgina and Kemerton, respectively; and
- Increase opportunity to meet rapidly growing lithium demand driven by electric vehicles and other end markets; and
The Liontown Board has confirmed to Albemarle that, subject to entry into a mutually acceptable non-disclosure and exclusivity agreement, it intends to grant Albemarle an opportunity to conduct a limited period of exclusive due diligence, subject to customary fiduciary exceptions, to enable it to put forward a binding proposal.
Should Albemarle make a binding proposal at $3.00 per share, the Liontown Board intends to unanimously recommend that Liontown shareholders vote in favor of the Revised Proposal, in the absence of a superior proposal, and subject to the parties entering into a mutually acceptable binding SID, the completion of Albemarle’s due diligence to Albemarle’s satisfaction, and an independent expert concluding (and continuing to conclude) that the revised proposal is in the best interests of Liontown shareholders.
Albemarle and Liontown will enter into a mutually acceptable non-disclosure and exclusivity agreement granting Albemarle with an exclusivity period to undertake confirmatory due diligence and negotiate a binding SID.
The revised proposal is non-binding and there is no certainty that any transaction will be agreed to or will proceed.
Liontown controls two major lithium deposits in Western Australia: the flagship Kathleen Valley project in Western Australia and the Buldania Project in the Eastern Goldfields Province of Western Australia. The Kathleen Valley project is one of the world’s largest and highest-grade hard rock lithium deposits, according to the company.