Liontown’s Board and advisers concluded that the indicative proposal, which was subject to several conditions, undervalues the company and is not in the best interests of its shareholders


Liontown rejects proposal from Albemarle. (Credit: Rolf Dobberstein from Pixabay)

Australian battery metals explorer Liontown Resources has rejected an unsolicited, conditional and non-binding indicative proposal from US-based speciality chemicals manufacturer Albemarle.

Albemarle offered a price of $2.50 per share to acquire all the shares in Liontown through a scheme of arrangement.

Liontown controls two major lithium deposits in Western Australia, including the Kathleen Valley project, said to be the world’s largest hard rock lithium deposit.

Its Board and advisers, after careful consideration, concluded that the indicative proposal undervalues the company and is not in the best interests of its shareholders.

The proposal was subject to several conditions, including Liontown providing exclusive due diligence, its Board unanimously recommending the proposal, regulatory approvals, and signing a mutually acceptable scheme implementation deed.

In addition, the Australian battery metals explorer recently found that RT Lithium, a subsidiary of Albemarle, has been building up a stake in the company, through on-market purchases.

According to the most recent share registry information, RT Lithium currently holds about 2.2% of Liontown’s issued shares.

Liontown has previously rejected two earlier non-binding indicative proposals from Albemarle, at $2.35 per share earlier this month, and $2.20 per share in October last year.

According to the company, the timing of Albemarle’s proposal concurs with recent softness in companies exposed to the lithium sector and the pre-production status of the Kathleen Valley project.

Liontown noted that the proposal does not reflect the significant de-risking at the Kathleen Valley lithium project in recent months.

In June last year, Liontown took the Final Investment Decision (FID) to develop the Kathleen Valley lithium project in Western Australia.

The FID will enable the start of construction on the project and the production of spodumene concentrate is expected to begin in the second quarter of 2024.

The company has also revised the pre-production capital cost estimate for the lithium project to A$545m from A$473m.