Arcadium Lithium Stock Jumps on Rio Tinto Acquisition Approach

Shares of Arcadium Lithium (NYSE: ALTM) have surged on news that mining giant Rio Tinto (LON: RIO) has approached the company regarding a potential acquisition.

The news follows an initial report by Reuters on Friday, which saw Arcadium's stock price jump 10% in the regular session. Premarket Monday, it is up 30%.

According to Reuters' sources, talks between Rio Tinto and Arcadium have been ongoing for some time, with the companies resuming talks in London last week during the LME Week conference. An offer is expected soon.

The deal could value Arcadium between $4 billion and $6 billion, making Rio Tinto the world's third-largest lithium producer behind Albemarle and SQM.

The recent slump in lithium prices, caused in part by Chinese oversupply, has made Arcadium an attractive target. The company's shares have fallen over 50% since January.

Acquiring Arcadium would give Rio Tinto access to lithium mines, processing facilities, and deposits across four continents, along with a customer base that includes Tesla, BMW, and General Motors.

Rio Tinto confirmed the approach to Arcadium in a press release today, stating that the discussions are non-binding and there is no guarantee of a final agreement.

“Rio Tinto today confirmed that it has made an approach to Arcadium Lithium regarding a potential acquisition of Arcadium Lithium by Rio Tinto,” the press release reads.

“The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed. Rio Tinto will not make further comment until or unless an update is appropriate,” the company stated.  

While the future of the deal remains uncertain, the news has undoubtedly boosted investor confidence in Arcadium.

The company's strong foothold in Asia, a key market for lithium demand, combined with its potential for growth in the Western Hemisphere, makes it an attractive acquisition target for Rio Tinto.