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Albemarle’s $4.2 billion takeover of lithium developer Liontown Resources has collapsed after Australia’s richest person Gina Rinehart acquired a large enough stake in the company to block the deal.
U.S. miner Albemarle, the world’s largest lithium producer, abandoned the Liontown deal on Monday, saying “the proposed transaction is becoming increasingly complex.”
The deal’s collapse highlights the growing battle for Australian lithium reserves as the world’s biggest developers seek to increase their capacity. Lithium is an important component of batteries used in electric vehicles.
Albemarle had been working on acquiring Liontown for months and its offer was accepted in September. Both Albemarle and Chile’s SQM are already investors in some of Western Australia’s largest lithium projects and have worked with local players such as IGO, Wesfarmers and Mineral Resources to develop projects.
But in recent weeks, Australian billionaire Rinehart has built up a 19.9 percent stake in Liontown through her iron ore mining company Hancock Prospecting. Rinehart stopped just below the threshold where she had to make a counteroffer to the company. However, their stake is large enough to potentially block a vote on the deal.
Albemarle did not directly cite Hancock’s stake as a reason for withdrawing from the deal. The U.S. miner’s exclusivity period to complete the acquisition has expired, but analysts said they do not expect Rinehart to make a counteroffer.
Kate McCutcheon, an analyst at Citi Australia, said a takeover bid from Hancock was “unlikely” given the risks associated with bringing the Liontown mine into operation.
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The billionaire has not commented on the reasons for her move to Liontown.
Hancock said in a September statement that it would look to work with other shareholders and that there were opportunities to create “downstream value” in the lithium market in Western Australia, referring to refining the mineral after extraction.
Liontown has appointed UBS to raise capital 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 (US$285 million) to bring the project into production by mid-2024.
Trading in Liontown shares on the Australian Stock Exchange was halted on Monday as the company looks to complete a fundraising to develop the mine. The stock was suspended at A$2.79 after the stock fell below the A$3 mark of Albemarle’s offer following the collapse of the deal.
Liontown said Albemarle expressed a “positive opinion” of Kathleen Valley and the management team despite backing away from its offer.
Hancock has not yet requested a seat on the Liontown board and would have to request a special meeting to do so, as board nominations for the annual meeting closed last week.