So far the market is working in Rio’s favor, as plunging lithium prices since January, pressed in part by lower-than-expected electric-vehicle sales and Chinese oversupply, have stymied Arcadium’s growth plans and forced it to mothball some operations just to survive.
Rio – which produces no lithium currently – and Philadelphia-based Arcadium are in talks about a potential deal. Both companies have said they will not comment further.
The potential buyout’s cost-saving measures are winning support from some analysts, as well as Rio’s ability to “un-constrain Arcadium’s production growth,” said RBC Capital Markets analyst Kaan Peker, referring to the lithium company’s need to balance growth against funding requirements.
Given the market malaise, negotiations have begun with what some investors have criticized as a low deal range of $4 billion to $6 billion or higher for Arcadium, sources told Reuters.
Arcadium…
