Rio Tinto Ltd (ASX:RIO) (LSE:RIO, ASX:RIO, OTC:RTNTF) is advancing its largest acquisition since 2007 after Arcadium Lithium Ltd shareholders voted to accept a US$6.7 billion (A$10.7 billion) all-cash offer.
The vote shifts attention to final regulatory hurdles in the United States, where scrutiny may arise due to Chinese state-owned Chinalco’s 14.9% stake in Rio.
Despite some resistance, including lawsuits filed in US courts by three shareholders alleging Arcadium directors failed in their fiduciary duty to maximise value, the vote saw overwhelming approval.
Arcadium has denied these allegations.
The dual-listed Rio has plenty of money in the bank for the acquisition but may consider a share issuance to increase ASX ownership: more than 75% of Rio’s value is traded on the London exchange under the dual listing structure.
Chief executive Jakob Stausholm noted that this option aligned with Rio's financial flexibility, even as its net debt could rise to approximately US$12 billion post-acquisition.
“We have confirmed our credit rating, so it’s not something we have to do, but it’s something that’s worthwhile considering,” Stausholm told investors earlier this month.
June 30, 2025, acquisition date
Stausholm also expressed confidence in securing remaining US regulatory approvals, projecting a June 30 completion date. The acquisition has already gained approval in key jurisdictions, including Australia, the UK and China.
The deal supports Rio’s ambition to establish a world-class lithium business. Arcadium’s assets include premier lithium brine operations in Argentina and processing facilities in Japan, China and North America, serving customers such as Tesla (NASDAQ:TSLA) and BMW.
Rio anticipates lithium sales could contribute 13% of its long-term earnings, diversifying revenue away from iron ore.
“We are building a world-class lithium business that couples Rio Tinto’s scale, development capabilities and financial strength with Arcadium’s tier-one lithium portfolio.”
Arcadium CEO Paul Graves welcomed the shareholder backing, emphasising the deal’s potential to bolster clean energy initiatives and benefit stakeholders.
“Together, we enhance our capabilities to successfully develop and operate our assets while supporting the clean energy transition. We are confident that this transaction will provide future benefit to our customers, employees and the communities in which we operate, and I am excited by the path ahead,” he said.
The acquisition follows Rio’s US$2.5 billion investment in Argentina’s Rincon lithium project and its ongoing efforts to advance the US$2.4 billion Jadar project in Serbia.
Rio forecasts a five-fold increase in lithium demand by 2035, positioning itself to capitalise on growth amid fluctuating market conditions.