Albemarle’s Liontownbid sparks worldwide search for counter bidders
Bankers were digging deep intotheir contact books on Wednesday to rustle up a competing bid for Tim Goyder’slithium hopeful Liontown Resources, after US giant Albemarle lobbed a (quickly rejected) $2.50 bid at an eye-watering 63 per cent premium.
High up on the hit lists were Rio Tinto, Wesfarmers – and thenin decreasing order of likelihood – Chilean conglomerate SQM, MineralResources, IGO, South32 and Fortescue Metals Group.
In bankers’ worlds, Liontown’s a significant discovery thatwould force everyone interested in lithium to think hard if they wanted to goup against incumbent Albemarle.
That’s despite all of Liontown’s cons: a shareholder register cloistered by Tim Goyder, a potentially big bill to production, and its attraction to short sellers.
Bankers hitting the phones on Wednesday put Pilbara Minerals andIGO in the unlikely box.
ilbara was looking inwards for growth,while IGO was understood to be joint at the hip with China’s Tianqi Lithium, who would have the first dibs on any lithium deal its Australian partner may want to strike. Sources reckoned it was possible the IGO/Tianqi tag team could size up Liontown, but they were in agreement the JV could slow things down.
Mineral Resources was in the too-hardbucket. It was unlikely to show up alone and bid against Albemarle, who is itsjoint venture partner at Wodgina. It would be interesting to see if MinRes Chris Ellison links arms with Albemarle on the deal. [They share a link in JPMorgan].
ESG-obsessed mining billionaire AndrewForrest’s Wyloo may not be able to resist a peek, but could be out of itsdepths given the $5 billion-plus asking price (in the absence of a bidpartner). South Korean steelmaker POSCO was another name tipped as a potentialbidder in need of a partner – a role Gina Rinehart’s Hancock Energy could fill, similar to Senex Energy shouldshe wish.
Still, top of bankers’ lists wereWesfarmers and Rio Tinto. Both have spoken about keeping an eye on lithiumM&A in the recent months and would be thinking hard about if they want toup Albemarle’s bid.
Wesfarmers needs lithium for itsKwinana refinery if it decided to stretch it beyond Mt Holland volumes, while Rio Tinto has picked lithium as its “future-facing” metal (while rival BHP chases nickel and spurs lithium).
Of course, everyone’s kept an eye onLiontown’s share price after Tuesday’s spectacular 68.5 per cent rally postbid. The question on their lips is obviously how much more Liontown stockAlbemarle – the only party firmly at the table for now – has managed to snag onmarket since despite the extensive short covering.
Market sources reckoned it hadcornered enough at $2.50 to stay under the substantial mark but climb up 2.2per cent it had when it lobbed its bid. Its broker JPMorgan was less active inthe stock on Wednesday.
From here, here’s a bit of stare downcontest between the bidder, who wants a board recommendation or engagement, andthe target who is understood to want a bid closer to the $3 mark – all thewhile keeping eyes on the horizon for an interloper to ride in.
(20min delay)