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The board of Australian lithium producer Liontown Resources intends to recommend shareholders vote in favor of a new increased buy offer from Albemarle if the world’s largest lithium producer makes its latest revised indicative proposal a binding offer.
Earlier this year, Albemarle submitted a non-binding proposal to acquire all outstanding shares of Liontown by way of scheme of arrangement for AUS$2.50, or US$1.661, per share in cash, which values Liontown at AUS$5.2 billion, or US$3.4 billion, on an enterprise basis. But Liontown Resources rejected that offer.
On Monday, the Australian company announced it had received a revised non-binding offer from Albemarle to buy all outstanding shares in Liontown at AUS$3.001 cash per share, which values Liontown at AUS$6.6 billion, or US$4.32 billion, on an equity value basis.
“After carefully considering the Revised Indicative Proposal, the Liontown Board has determined 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, subject to the parties agreeing to a mutually acceptable non-disclosure and exclusivity agreement,” the Australian company said today.
If Albemarle makes a binding proposal at the latest indicative price, “the intention of the Liontown Board is to unanimously recommend shareholders vote in favor of the proposal in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the proposed transaction is in the best interests of shareholders,” Liontown added.
The Australian company also noted that there is no certainty that the revised indicative proposal would progress to a binding offer for consideration by shareholders.
Albemarle, for its part, said that “The Revised Proposal delivers an immediate premium for Liontown investors and is expected to drive significant value creation for Albemarle shareholders. The transaction is consistent with Albemarle's long-term growth and stated M&A strategy, as well as its disciplined approach to capital allocation and risk-adjusted value accretion.”
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com