Liontown Resources rejects third attempted takeover offer by Albemarle Corp
Liontown Resources’ board says Albemarle’s third offer of $2.50 a share still “substantially undervalues” the company.
Emerging battery metals producer Liontown Resources (ASX: LTR) has rejected an unsolicited indicative takeover offer from Albemale Corporation (NYSE: ALB) on the grounds that it undervalues the company.
The offer was received this week and proposed the acquisition of all Liontown shares at $2.50 each via a scheme of arrangement.
It effectively valued Liontown at $5.5 billion and was subject to a number of conditions before it could become binding, including the provision of exclusive due diligence to Albemarle and a unanimous recommendation by Liontown’s board of directors.
Liontown’s board — together with financial adviser Greenhill & Co and legal adviser Allens — determined that Albermarle’s offer “substantially undervalues” the company and is therefore not in the best interests of shareholders.
Third attempt
This week’s offer marks Albermarle’s third attempt at buying out the junior explorer.
In October, Liontown rejected an indicative takeover offer priced at $2.20 per share and earlier this month, also rejected an offer at $2.35 per share.
Albermarle subsidiary RT Lithium Ltd is also believed to be building a stake in Liontown through on-market purchases and currently holds approximately 2.2% equity.
Opportunistic timing
Liontown noted the “opportunistic timing” of Albemarle’s latest takeover offer, which coincides with the pre-production status of its flagship Kathleen Valley project and a recent softness in companies exposed to the lithium sector.
The board claimed the offer does not reflect the de-risking which has occurred at the project in recent months with mining operations commencing, construction moving to schedule and Liontown staying on track to deliver first production in mid-2024.
“Liontown has extensive growth options at Kathleen Valley including potential early revenue from direct shipping ore, a recent 20% increase in plant throughput rate, the direct future downstream participation and other expansion opportunities,” it said.
“The scarcity value of this project as there are few other lithium assets of this scale, quality and mine life this close to production in Australia, which remains one of the most attractive mining jurisdictions in the world.”
Liontown said it continues to progress numerous funding options for the remaining capital costs at Kathleen Valley.
The board of directors confirmed that shareholders do not need to take any action at this point.