Rio Tinto Group (RIO) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition creates a world-leading lithium business, positioning the acquirer as a global leader in lithium resources and production, and strengthening its portfolio in energy transition commodities alongside aluminium and copper.

• Lithium is critical for electric vehicles and energy storage, with demand expected to grow at over 10% CAGR until 2040.

• Arcadium's vertically integrated portfolio and technological leadership in direct lithium extraction (DLE) align with the acquirer's project delivery and financial strengths, complementing existing operations in Argentina and Quebec.

• The deal leverages the acquirer's scale, financial strength, and development capabilities to unlock Arcadium's Tier 1 resource base and accelerate growth.

• Both companies have deep experience and established operations in key geographies like Canada and Argentina.

Financial terms and conditions

• All-cash transaction at $5.85 per Arcadium share, representing a 90% premium to the 4 October 2024 closing price and valuing Arcadium at approximately $6.7 billion.

• The deal is unanimously approved by both boards and will be implemented via a Jersey Scheme of Arrangement.

• Completion is expected by mid-2025, subject to shareholder, court, and regulatory approvals.

• Arcadium's projected growth capex to represent about 5% of the acquirer's group capex of up to $10 billion across 2025 and 2026.

• The transaction will be funded from existing liquidity, with no impact on the acquirer's dividend policy.

Synergies and expected cost savings

• Significant synergies expected from combining DLE technology and downstream capabilities, enabling rapid expansion and cost efficiency.

• The acquirer's balance sheet and project delivery expertise are expected to accelerate Arcadium’s growth pipeline and create the world's largest lithium resource base.

• Opportunity for economies of scale, supply chain optimization, and regional development in Canada and Argentina.

• Technological leadership in lithium extraction and processing expected to drive operational efficiencies.

• Statements of estimated cost savings and synergies are forward-looking and subject to risks and uncertainties.