Rio to acquire Arcadium in $10b deal

Rio Tinto has confirmed it will acquire Arcadium Lithium in a $US6.7 billion ($9.97 billion) deal that will establish Rio as the world’s third-largest lithium miner.

The deal has been struck through a definitive transaction agreement, under which Rio Tinto will acquire Arcadium in an all-cash transaction for $US5.85 ($8.71) per share.

This is a 90 per cent premium on Arcadium’s October 4 closing price of $US3.08 ($4.59) per share.

“Acquiring Arcadium Lithium is a significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside our leading aluminium and copper operations to supply materials needed for the energy transition,” Rio Tinto chief executive officer Jakob Stausholm said.

“Arcadium Lithium is an outstanding business today and we will bring our scale, development capabilities and financial strength to realise the full potential of its Tier 1 portfolio.

“This is a counter-cyclical expansion aligned with our disciplined capital allocation framework, increasing our exposure to a high-growth, attractive market at the right point in the cycle.”

Arcadium Lithium chief executive officer Paul Graves said he is confident the deal is more than fair to shareholders.

“This agreement with Rio Tinto demonstrates the value in what we have built over many years at Arcadium Lithium and its predecessor companies, and we are excited that this transaction will give us the opportunity to accelerate and expand our strategy, for the benefit of our customers, our employees, and the communities in which we operate,” Graves said.

Since Alkem and Livent officially merged at the start of 2024 to become Arcadium Lithium, the company has ramped up its production capacity to 75,000 tonnes of lithium carbonate per year, with expansion plans in place to more than double capacity by the end of 2028.

Arcadium chair Peter Coleman addressed shareholders with a letter supporting the transaction, emphasising the transaction is in their ‘best interests’ given the recent volatility in lithium prices.

“The immediate and substantial cash offer provides shareholders with certainty and liquidity, allowing shareholders to realise the full value of our investment without the ongoing risks associated with potential future market fluctuations,” Coleman said.

“By accepting this proposed transaction from a larger, more diversified player, shareholders can avoid these risks as well as potential delays or setbacks in project execution, in exchange for immediate returns.”