Lithium Americas trumps CATL with US$400 million offer to buy Millennial Lithium

Lithium Americas (TSX: LAC; NYSE: LAC)  has submitted an unconditional offer to acquire all the outstanding shares of Millennial Lithium (TSXV: ML) at $4.70 per share, payable in cash and Lithium Americas common shares for a total consideration of about US$400 million.

Based on Lithium Americas’ closing price on October 29, this consideration would result in Millennial shareholders owning about 9.9% of Lithium Americas.

Millennial Lithium has two non-producing lithium brine assets in northern Argentina — Pastos Grandes and Cauchari East, with a combined 4.12 million tonnes of lithium carbonate equivalent (LCE) in measured and indicated resources.

Lithium Americas and partner Ganfeng Lithium are currently developing the Caucharí-Olaroz lithium project in Argentina’s Jujuy province, and the company expects it to start production in the third quarter of 2022.  

Caucharí-Olaroz, named after the two salars in northwestern Argentina where the project is located, has an annual production capacity of 40,000 tonnes lithium carbonate equivalent (LCE) over a projected mine life of 40 years.

Development planning is now underway for the Stage 2 expansion, which is expected to add at least 20,000 tonnes per year of production capacity to the Caucharí-Olaroz operation, beginning in 2025.

“In proximity to Caucharí-Olaroz, Millennial’s 100%-owned Pastos Grandes lithium brine project represents an attractive regional growth opportunity for Lithium Americas,” Jonathan Evans, Lithium Americas’ president and CEO, stated in a news release.

“As we bring Caucharí-Olaroz into production over the next year and continue to advance our Stage 2 expansion planning, the addition of this highly complementary lithium brine resource further enhances our long-term growth strategy in Argentina and leverages our technical and development expertise.”

In late September, China’s Contemporary Amperex Technology Co. (CATL), the world’s leading electric vehicle battery manufacturer, was revealed as the leading bidder for Millennial, with an offer of $3.85 per share for a total cash consideration of about $377 million (US$297 million).

Now, with a superior offer presented by Lithium Americas, the Millennial board has unanimously determined that this constitutes a “superior proposal” in accordance with the terms of the arrangement agreement between Millennial and CATL.

As such, Millennial has notified CATL that the latter would have ten business days to match the offer, should it choose to do so.

Lithium Americas will, subject to certain conditions, reimburse Millennial for the termination fee of US$20 million payable to CATL, should the CATL agreement be terminated.