Liontown Resources' board has yielded to an increased takeover offer from US industry heavyweight Albemarle, marking a notable turn in the company's fate.
In an announcement on Monday, Liontown informed the ASX that Albemarle had escalated its bid to $3 cash per share, up from the previous $2.50. Consequently, Liontown granted Albemarle limited due diligence, potentially setting the stage for a deal and board recommendation, assuming no rival bid emerges.
This development followed Albemarle's recent affirmation that its $2.50 a share offer remained on the table, despite Liontown's prior rejection and absence of new negotiations.
Liontown's shares, which had previously experienced a decline, surged by nearly 9% on Monday to $2.86 – a response to Albemarle's offer. The stock price fell just short of the $3 offer, signaling that investors don't anticipate any competing bids to surpass Albemarle's.
An additional advantage Albemarle brings to the table is its financial capability to support and complete projects. Albemarle has the resources to back the $900 million Kathleen Valley lithium mine project – a prospect that may favorably differentiate it from other potential bidders.
Given its financial standing, Albemarle could circumvent a financial support deal that Liontown was pursuing from export agencies in Australia, South Korea, and the US. These agencies were considering providing $A300 million to back Liontown's project.
Albemarle's revised $3 a share offer raises Liontown's valuation to $6.6 billion, effectively pricing out potential rivals except for major miners such as BHP, Rio Tinto, or Glencore. Despite the offer's appeal, these mining giants have yet to express interest since Albemarle's initial bid in March.
Liontown conveyed that it had received a "revised conditional and non-binding indicative proposal from Albemarle Corporation to acquire all of the ordinary shares outstanding in Liontown for $3.00 in cash per share via scheme of arrangement." The board has granted Albemarle a window for exclusive due diligence and affirmed that it intends to recommend shareholders' approval if Albemarle submits a binding proposal.
The market observes with interest, speculating on the actions of Liontown's Chair, Tim Goyder. With his 14.97% stake worth nearly $A1 billion under the revised Albemarle offer, Goyder faces a significant decision regarding the company's future.