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Albemarle’s $4.2 billion deal to buy the company collapsed after Australia’s richest man, Gina Rinehart, took a large enough stake in lithium developer Liontown Resources to block the deal.
U.S. miner Albemarle, the world’s largest lithium producer, abandoned the Liontown deal on Monday, citing the “increasing complexity of the proposed transaction.”
The collapse of the deal highlights growing competition for Australian lithium assets as the world’s largest developers seek to increase production capacity. Lithium is a key component of electric vehicle batteries.
Albemarle spent several months working to acquire Liontown and accepted the offer in September. Both Albemarle and Chile’s SQM are already investors in some of Western Australia’s largest lithium projects, developing projects in partnership with local players such as IGOs, Wesfarmers and Mineral Resources.
But in recent weeks, Australian billionaire Rinehart has taken a 19.9% stake in Liontown through her iron ore mining company Hancock Prospecting. Reinhardt paused just below the threshold where she needed to make a counteroffer to the company. However, her stake is large enough to potentially block a vote on the deal.
Albemarle did not directly cite Hancock’s stake as a reason for abandoning the deal. The U.S. miner’s exclusive deadline to complete the acquisition has expired, but analysts said they did not expect Reinhardt to make a counteroffer.
Kate McCutcheon, an analyst at Citibank Australia, said Hancock was “unlikely” to make a takeover bid given the risks associated with bringing the Liontown mine into production.
The billionaire has yet to comment on her reasons for moving to the Lion City.
Hancock said in a statement in September that it would seek to work with other shareholders and opportunities to create “downstream value” in the Western Australian lithium market, referring to the refining of the mineral after mining.
Liontown has appointed UBS to raise funds for the development of its key Kathleen Valley project, with the aim of completing the financing this week. The company hopes to raise A$450 million ($285 million) in funding to bring the project into production by mid-2024.
Liontown said it expressed a “favorable view” of Kathleen Valley and the management team even though Albemarle dropped its offer.
Hancock has not yet applied for a seat on Liontown’s board of directors and would need a special meeting to do so because board nominations for the annual meeting closed last week.
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