Albemarle won't make a binding offer for Liontown Resources and its Kathleen Valley project after billionaire Gina Rinehart bought up nearly 20 per cent of the business.
NYSE-listed lithium player Albemarle won't make a binding offer for Liontown Resources and its Kathleen Valley project after Gina Rinehart bought up nearly 20 per cent of the business.
Both Albemarle and its proposed target cited ‘growing complexities’ linked to the $6.6 billion proposed acquisition in disclosing the decision to the market on Monday morning.
Albemarle’s chance of success in acquiring Liontown, which is developing Australia's next lithium mine in the Goldfields, had become less likely after Hancock Prospecting declared intentions to own 19.9 per cent of its target.
"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 chief executive Kent Masters said.
“That said, moving forward with the acquisition, at this time, is not in Albemarle's best interests."
It comes days after Liontown kept a data room open for Albemarle for an additional seven days to complete its due dilligence.
It had been widely expected that Albemarle would put forward a binding proposal to buy Liontown at $3 per share from there.
However, the increased presence of Hancock Prospecting on Liontown's register has made the prospect of Albemarle getting the 75 per cent approval it needs to close a deal considerably harder.
Mrs Rinehart's company, Hancock Prospecting, owns 19.9 per cent of Liontown as of last week and has previously indicated it might seek a board position with the company.
With a clear proposed suitor out of the picture and no alternative offer on the table from Hancock, Liontown said it was confident in its ability to thrive independently.
“We acknowledge Albemarle’s decision. They were constructive and respectful throughout the diligence process," Liontown chief Tony Ottaviano said.
"Notwithstanding, our position to maintain momentum on our base plan has allowed us to keep line of sight of first production from the Kathleen Valley project in mid-2024."
Shortly after disclosing the deal had been canned, Liontown entered a trading halt to finalise additional required funding for Kathleen Valley.
Construction of the lithium operation has been marred by rising cost pressures.
The total projected bill has climbed from an initially projected $473 million in 2021 to nearly $1 billion at last count.
Once operational, Kathleen Valley is expected to produce an initial 500,000 tonnes per annum of spodumene concentrate, with offtakes with LG, Tesla and Ford already lined up.
Analysts Wilson Equity Research have maintained that Liontown is still an 'attractive target' despite Albemarle walking from the deal.
An initial research take from the group also held that the scale of Kathleen Valley meant it would still have several funding avenues to fall back on.
Prior to entering a trading halt, Liontown shares last changed hands at $2.79.
