Albemarle Announces Proposal to Acquire Liontown

Rhea-AI Summary

Albemarle Corporation (NYSE: ALB) announced a non-binding proposal to acquire Liontown Resources (ASX: LTR) for A$2.50 (US$1.66) per share, valuing Liontown at A$5.2 billion (US$3.4 billion). This offer represents a significant premium: 63% over Liontown's closing price on March 27, 2023, and 69% over the 30-day VWAP. Albemarle aims to enhance liquidity for Liontown shareholders and mitigate risks associated with future project developments, particularly the Kathleen Valley project. The proposal has received unanimous approval from Albemarle's Board and is backed by financial support from J.P. Morgan.

Positive

• Proposed acquisition offers 63% premium to closing share price.
• Significant market expansion opportunity in battery-grade lithium supply.
• Strengthens Albemarle's strategy in clean energy transition.

Negative

• Liontown's Board has not engaged meaningfully with Albemarle.
• Potential integration challenges post-acquisition.

Proposal Represents All-Cash Offer at A$2.50 or US$1.66 per Share

CHARLOTTE, N.C., March 27, 2023 /PRNewswire/ -- Albemarle Corporation (NYSE: ALB), a global leader in transforming lithium and bromine into essential ingredients for mobility, energy, connectivity and health, notes the announcement to the ASX by Liontown Resources (ASX: LTR) on March 28, 2023, and confirms that it submitted a non-binding proposal to acquire all outstanding shares of Liontown by way of scheme of arrangement for A$2.50 or US$1.66¹ per share in cash, which values Liontown at A$5.2 or US$3.4 billion on an enterprise basis. 

Albemarle believes the proposal is a compelling opportunity for Liontown shareholders with the per share consideration representing a substantial premium to Liontown shareholders and a material premium over relevant benchmarks:

• 63% premium to Liontown's closing share price on March 27, 2023
• 69% premium to the 30-day VWAP
• 184% premium to the 52-week low share price
• 41% premium to the median broker price target

To highlight a commitment to the transaction, Albemarle has accumulated a less than 5% stake in Liontown stock as of March 27, 2023, through on-market purchases. 

Albemarle notes that the Liontown Board has not meaningfully engaged with Albemarle to facilitate its shareholders receiving the benefits of the proposal. Albemarle believes this is a compelling opportunity for Liontown shareholders and that Liontown's Board should immediately engage with Albemarle to facilitate a binding offer to be put to its shareholders for their consideration.

Albemarle believes this offer provides enhanced liquidity and accelerates the realization of incremental value for Liontown shareholders beyond what might otherwise be expected from share price performance over the next few years and without the operating, market, financial and other risks that could impact the value of Liontown. Albemarle has submitted this attractive cash offer in advance of Liontown's completion of the Kathleen Valley project, which allows Liontown shareholders to avoid future risks associated with project development and operations.

As a leading supplier of battery grade lithium products, Albemarle is well positioned in Australia and holds various interests and stakes in important assets, including world-class spodumene resources and lithium conversion facilities at Greenbushes, Wodgina and Kemerton in Western Australia. Albemarle believes the addition of Liontown and its team would advance its strategy to produce a sustainable, high-quality supply of battery grade materials to support the clean energy transition. As a result, in addition to being highly compelling for Liontown shareholders, the proposal represents an exciting opportunity for Liontown, as well as its customers, employees and other stakeholders. Liontown has signed off-take agreements with three world-class partners in the battery and automotive sectors and Albemarle would look forward to continuing to partner with those leaders as the owner and operator of Liontown.

Albemarle remains committed to acting in the best interests of its shareholders and based on publicly available information, is confident the potential transaction is consistent with the Company's long-term growth strategy and disciplined approach to capital allocation and risk-adjusted value accretion. Pro forma for this potential transaction Albemarle will maintain a strong balance sheet and an expected net leverage of approximately 1.5x ².

This offer was unanimously approved by Albemarle's Board of Directors. Albemarle's proposal to Liontown represents a non-binding proposal which is subject to, among other things, the execution of definitive transaction documentation and completion of customary due diligence.

Albemarle is prepared to engage immediately in discussions with Liontown to work toward a mutually acceptable definitive agreement and is ready to devote all necessary resources to finalize the documentation on an expeditious basis.

J.P. Morgan is serving as financial advisor and Corrs Chambers Westgarth is serving as legal advisor to Albemarle. J.P. Morgan is also prepared to provide Albemarle with committed financing to support an acquisition of Liontown and a binding offer to acquire Liontown would not be subject to a financing contingency.

About Albemarle
Albemarle Corporation (NYSE: ALB) is a global leader in transforming essential resources into critical ingredients for mobility, energy, connectivity, and health. Together with our world-class lithium and bromine resources, technical and process knowledge, and safety and sustainability performance, we partner with our customers to pioneer new ways to move, power, connect, and protect. We are committed to building a more resilient world where people and planet thrive. Learn more about Albemarle at www.albemarle.com and at @albemarlecorp on LinkedIn, Twitter, and Facebook.

Albemarle regularly posts information to its website, including notification of events, news, financial performance, investor presentations and webcasts, non-GAAP reconciliations, SEC filings and other information regarding the company, its businesses, and the markets it serves. Albemarle Corporation (NYSE: ALB) is a global leader in transforming essential resources such as lithium and bromine into critical ingredients for mobility, energy, connectivity, and health. Together with our world-class resources, technical and process knowledge, and safety and sustainability performance, we partner with our customers to pioneer new ways to move, power, connect, and protect. We are committed to building a more resilient world where people and planet thrive. Learn more about Albemarle at www.albemarle.com and at @albemarlecorp on LinkedIn, Twitter, and Facebook.

Forward-Looking Statements
This press release contains statements concerning our expectations, anticipations, intentions, beliefs, or strategies regarding the future, which constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on assumptions that we have made as of the date hereof and are subject to known and unknown risks and uncertainties that could cause actual results, conditions and events to differ materially from those anticipated, often contain words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "would," "will" and variations of such words and similar expressions. Forward-looking statements may include, without limitation, the outcome of any discussions between Albemarle Corporation and Liontown with respect to a possible transaction, including the possibility that the parties will not agree to pursue a business combination transaction, and all other information relating to matters that are not historical facts. Factors that could cause actual results to differ materially from the outlook expressed or implied in any forward-looking statement include, without limitation: changes in economic and business conditions; adverse changes in liquidity or financial or operating performance; changes in the demand for our products or the end-user markets in which our products are sold; fluctuations in lithium market pricing; changes in laws and government regulation; and the other factors detailed in the reports we file with the SEC, including those described under "Risk Factors" in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on the investor section of our website (investors.albemarle.com). These forward-looking statements speak only as of the date of this press release. We assume no obligation to provide any revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.

¹ Based on an AUD/USD exchange rate of 0.6642 as at March 27, 2023.
² Based on Albemarle's balance sheet and trailing-twelve-month adjusted EBITDA as of December 31, 2022.

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SOURCE Albemarle Corporation

FAQ

What is Albemarle's proposal to acquire Liontown?

Albemarle proposed to acquire Liontown at A$2.50 per share, valuing Liontown at A$5.2 billion.

What premium does Albemarle's offer represent for Liontown shareholders?

The offer represents a 63% premium over Liontown's closing share price as of March 27, 2023.

What are the strategic implications of the acquisition for Albemarle?

The acquisition aims to enhance Albemarle's position in the battery-grade lithium market and support the clean energy transition.

Who is advising Albemarle on the Liontown acquisition deal?

J.P. Morgan is serving as the financial advisor, while Corrs Chambers Westgarth is the legal advisor.

What financial backing does Albemarle have for the acquisition?

J.P. Morgan is prepared to provide committed financing for the acquisition without a financing contingency.