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Lithium Giant Albemarle Spurned in $3.7 Billion Liontown Bid

(Bloomberg) — Albemarle Corp., the world’s top lithium producer, had a A$5.5 billion ($3.7 billion) takeover offer rejected by Liontown Resources Ltd., an Australian producer of the battery metal.

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Albemarle offered to acquire all of Liontown’s equity at A$2.50 a share, its third bid in five months, the Perth-based company said on Tuesday. The offer, a 64% premium on Monday’s closing price, comes after a slump in lithium prices from last year’s record and a corresponding drop in Liontown’s share price.

“There’s a lot of dry powder for lithium M&A but many players have been waiting for toppy pricing to come off,” Credit Suisse analyst Saul Kavonic said. “We are starting to see some of the heat coming out of the lithium macro.”

The Australian miner rallied as much as 65% to A$2.52 following Tuesday’s announcement, its highest price on record. It had “not meaningfully engaged” with Albemarle, the US company said in a separate statement.

“Albemarle is prepared to engage immediately in discussions with Liontown to work toward a mutually acceptable definitive agreement,” the US-based miner said.

The move comes as Albemarle expands output and invests in new facilities to meet rising long-term demand for electric vehicle batteries and to help the firm comply with President Joe Biden’s push to ensure suppliers favor production in the US or free-trade partner nations. The company already has a major presence in Australia, with stakes in two major hard-rock lithium mines and a recently completed lithium hydroxide refinery south of Perth.

READ: Insatiable Lithium Demand Fuels Investment Boom in Australia

Liontown owns one of the most promising early-stage lithium projects in Australia, the world’s top exporter of the battery metal, and has supply agreements with major automakers including Tesla Inc. and Ford Motor Co. A forecast fivefold growth in global lithium demand by 2030 and a predicted supply deficit that will help underpin prices were among factors for the rejection, the miner said.

Liontown’s mine at Kathleen Valley is a “unique, long-life project” in Western Australia that could ramp up production more quickly if held by a company with a larger balance sheet, Citigroup Inc. analyst Kate McCutcheon said in a note. Albemarle would need to increase its offer to get Liontown’s board “back to the negotiating table,” she said.

Liontown said it rebuffed earlier proposals by Albemarle of A$2.35 per share on March 3, and A$2.20 per share on Oct. 20. Liontown said a subsidiary of Albemarle holds about 2.2% of its shares.

–With assistance from David Stringer.

(Updates with analyst comment in third paragraph)

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