Albemarle dumps $4.2 billion Liontown lithium bid, cites ‘growing complexities’

By Melanie Burton and Scott Murdoch

MELBOURNE (Reuters) -U.S.-based miner Albemarle said it had dumped a A$6.6 billion ($4.16 billion) buyout bid for Australian lithium developer Liontown Resources, in part because of “growing complexities” around the transaction.

Albemarle has withdrawn its indicative proposal, the companies confirmed in separate statements that came days after Hancock Prospecting, an iron ore miner controlled by Australia’s richest person, Gina Rinehart, raised its stake to 19.9% of Liontown.

That shareholding would likely have been enough to block the Albemarle bid of A$3 a share.

Liontown went into trading halt just after making the announcement to the market, pending a finalisation of funding for its flagship Kathleen Valley lithium project in Western Australia, which is due to start producing lithium in the middle of next year.

Liontown said last month it was well advanced in discussions with lenders to obtain at least A$450 million to cover initial costs as it raised its capital cost estimate by 6% to A$951 million but kept its first production target.

Kathleen Valley is widely regarded as one of the world’s top five lithium projects and Liontown has already signed deals to supply Ford Motor Co, Tesla and electric vehicle (EV) battery maker LG Energy.

Liontown had last week granted the world’s biggest lithium chemical maker an extra week to examine its books and allow Albemarle to put forward a binding offer.

“Our engagement with the Liontown team has been meaningful and productive. We appreciate the level of cooperation we have received, and we thank the entire team for their efforts,” Albemarle CEO Kent Masters said in a statement.

“That said, moving forward with the acquisition, at this time, is not in Albemarle’s best interests.”

A source familiar with the talks said Liontown had expected the scheme implementation deed to have been signed on Thursday after the extra week of due diligence was carried out but that it was told over the weekend the deal was not going ahead.

Hancock has not yet approached Liontown which until now has been under an exclusivity deal with Albemarle, the source added.

Hancock declined to comment. It had previously cast doubt on Liontown’s ability to bring Kathleen Valley online within cost and timeframe projections and offered its services.

($1 = 1.5868 Australian dollars)

(Reporting by Melanie Burton in Melbourne, Scott Murdoch in Sydney and Rishav Chatterjee in Bengaluru; Editing by Lisa Shumaker, Sandra Maler and Jamie Freed)