Liontown rejects $5.5b takeover bid that sparks up lithium sector

One of the world’s largest lithium producers has sparked a resurgence in dwindling lithium stocks after it lobbed an audacious $5.5 billion takeover bid at West Australia’s Liontown Resources, an offer the miner’s board has promptly rejected.

New York-listed chemicals giant Albemarle said on Tuesday it would pay $2.50 a share for Liontown, valuing the company at $5.5 billion, after building a 2.2 per cent stake in Western Australian minnow miner through its subsidiary RT Lithium.

The fresh bid – Albemarle has taken two previous tilts at Liontown – sent shares in the miner soaring 50 per cent in early trade to $2.26, as investors digested details of the proposed buyout via a scheme of arrangement.

“The Liontown board and its advisers carefully considered the indicative proposal and unanimously
determined that it substantially undervalues Liontown, and therefore is not in the best interests of
shareholders,” the company told the ASX in a statement.

Liontown called the timing of the $US26 billion ($40 billion) lithium producer’s bid “opportunistic” given the “recent softness in companies exposed to the lithium sector”.

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It said it had significantly de-risked its key Kathleen Valley lithium project, which has been weighing on its share price, with mining operations commencing, construction progressing, and the project remaining on track to deliver in mid-2024.

“Liontown continues to progress a number of attractive funding options for the remaining capital at the
Kathleen Valley Lithium Project and expects to update the market on this front in the near term,” it said.

The scarcity of comparable lithium projects – there are few other assets of its scale, quality and mine life – and the possibility of early revenue from the direct shipping or ore, make it one of the most attractive lithium projects around, Liontown’s board said.