Ground Breakers: Liontown pours cold water on takeover rumours

Liontown has assured the ASX that it has not fielded, and rejected, a takeover bid from a second suitor, after a media report sparked speculation.

It's quite possible the Lion(town) won't sleep tonight, amid hotly denied takeover rumours. Picture: Camilo Torres/iStock via Getty Images

Liontown Resources (ASX:LTR) has assured the ASX that it has not fielded, and rejected, a takeover bid from a second suitor, after a media report sparked speculation.

Whether a fresh bid will be flying in for Liontown is one of the big questions on the lips of lithium investors.

It’s also intriguing speculators, investment bankers and business journos, all of whom are keen to get a slice of the action on what would be one of the biggest deals this year if were to proceed.

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To outline the state of play, tim Goyder’s Liontown rejected a third, $2.50-a-share bid from US lithium giant Albemarle, which valued the junior at more than $5 billion and representing a more than 13,000 per cent gain for the one-time penny stock over the past five years.

Attractive? Sure, but not good enough for the prospective lithium miner, which plans to open its $895 million Kathleen Valley spodumene mine in WA’s Goldfields in mid-2024.

With LTR shares trading well above the offer price at $2.76 today, the company is believed to want somewhere in the order of $3 to head to the negotiating table.

Liontown’s shares have risen a ridonculous 80 per cent since the bid landed. But since then it’s also been quiet ... too quiet.

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Whether anyone other than Albemarle would play ball at those prices remains to be seen, and really depends on how bullish prospective suitors are about the future deficit in lithium as internal combustion engine vehicle bans roll in from the end of the decade, forcing a consumer switch to electric vehicles effectively run on lithium-ion batteries.

ALB reports its quarterly results tomorrow, and if it walks away, then the fluff the bid’s reveal in March gave not only LTR but the wider lithium market - at a time prices were falling hard - could disappear into the wind.

Reports emerged in the the Australian Financial Review on Monday of a potential second bidder rejected by Liontown last month.

The company quickly reacted, issuing a statement to the ASX on Tuesday morning declaring it had not received any takeover proposals, indicative or real, since rejecting Albemarle on March 28.

The chase continues.

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And on the markets

That little tidbit made Liontown one of the top gainers at just 1.48 per cent on a pretty dry Tuesday morning for the materials sector, with fellow lithcos Allkem (ASX:AKE), IGO (ASX:IGO) and Lake Resources (ASX:LKE) in lockstep and the index down 0.47 per cent.

The three big iron ore miners were all in the red, but any real signals for iron ore will be muted for a couple of days still with China on holiday.

This content first appeared on stockhead.com.au

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