Rio Tinto doubles down on lithium
Happy Friday!
This week, Rio Tinto struck a deal to buy US-based Arcadium Lithium for $6.7 billion, confirming an excellent scoop from my colleagues Ernie Scheyder and Clara Denina .
Ernie and Clara put out an insightful analysis earlier today on how the takeover of Arcadium will give Rio a suite of lithium filtration technologies that are poised to revolutionize how the metal is produced for the electronics and electric vehicle industries.
Arcadium's expertise in so-called direct lithium extraction (DLE) is the real prize for Rio, analysts said, and vaults it into contention with, Sunresin, Exxon Mobil and others aiming to make the technology commonplace in coming years.
The DLE industry is expected to grow to more than $10 billion in annual revenue within the next decade by supplying lithium for EV batteries in hours or days, not months or longer as with existing large, water-intensive evaporation ponds and open pit mines.
While DLE technologies vary, they are comparable to filtration used by common household water softeners and aim to extract about 90% or more of the lithium from brines, compared to about 50% using ponds.
No one has launched a commercial DLE operation without ponds, although multiple companies are racing to be first.
Arcadium, through a predecessor company, was the first to develop an early version of a DLE technology in the 1990s at an Argentina lithium brine site that is still operational today.
While that site uses ponds in tandem with DLE, Arcadium's decades-long experience with the technology makes it a tantalizing prize for Rio as it aims to develop lithium deposits in Chile, where officials are phasing out ponds and requiring DLE, and elsewhere.
Echo Wang, Max A. Cherney and Krystal Hu were first to report that Cerebras Systems is likely to postpone its IPO, after facing delays with a U.S. national security review on UAE-based tech conglomerate G42's minority investment in the AI chipmaker.
Cerebras, which competes with industry leader Nvidia in the lucrative artificial intelligence chip market, is likely to call off the roadshow that was scheduled for early next week for its highly anticipated initial public offering, the sources said, requesting anonymity as the discussions are confidential.
The Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments over possible national security concerns, is currently looking into G42's investment in Cerebras, the company disclosed in a recent regulatory filing.
Cerebras still expects CFIUS to green-light the G42 deal this year. The company will look to proceed with a stock market launch as soon as it receives the necessary clearance from CFIUS.
UAE-based technology group G42, which is an investor and the biggest client of Cerebras, has drawn increased scrutiny from China hawks in Washington, amid fears that the UAE and other Middle Eastern companies are becoming a conduit for China to receive advanced American AI technology it is blocked from getting directly from the United States.
Elsewhere, Sabrina Valle - who joined the all-star Reuters deals team this week - hit the ground running with her story on GXO Logistics, a provider of logistics services with a market value of roughly $6 billion, which is exploring a potential sale after receiving takeover interest.
GXO, which was spun off from trucking company XPO in 2021, is working with a financial advisor to field acquisition interest from suitors, which include rival logistics providers. It has not made a final decision to proceed with a sale, and it is possible that the talks may not result in a deal. ?GXO's shares jumped more than 8% on the news.
GXO is one of the world' largest providers of supply chain management tools. Its services include AI-powered robotics, transportation, warehousing, and logistics for industries such as aerospace & defense, e-commerce, healthcare, and consumer packaged goods.
Earlier on Friday, Amina Niasse was first to report that CVS Health is exiting its core infusion services business and plans to either close or sell 29 related regional pharmacies in the coming months . This follows our blockbuster scoop from last week on CVS’ plans to break up.
Details of the strategic shift were announced in a CVS corporate memo dated Oct 8 and seen by Reuters.
The company has stopped taking new patients seeking antibiotics, drugs supporting muscular health, and intravenous nutrition services.
CVS bought Coram LLC, a drug infusion services provider, for $2.1 billion in 2013.
It will continue to provide specialty medications and enteral nutrition, or tube feeding, at pharmacies in Minnesota, Pennsylvania and San Diego, and provide nursing services nationwide.
And finally, Shankar Ramakrishnan, Allison Lampert, Echo Wang, and Mike Stone produced a terrific story on Boeing examining its options to raise billions of dollars through a sale of stock and equity-like securities.
In the past few weeks, Boeing has received pitches from investment banks, including Goldman Sachs, JPMorgan, Bank of America, and Citigroup, suggesting various fundraising options.
These options include selling common stock as well as securities such as mandatory convertible bonds and preferred equity. Boeing has been advised that it should raise around $10 billion.
Such hybrid bonds can be treated as equity capital by rating agencies, which means issuing them would not add to debt to the same extent as selling bonds, while also being potentially more favorable for existing shareholders.
Banks have also been building so-called shadow books, sounding out interest from investors for such securities in case Boeing decided to go ahead. Some investors have reached out to banks to tell them they were interested in purchasing Boeing’s preferred securities if they were issued.
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And here’s the best of the rest from the Reuters corporate finance file:
Investors pushed Bain Capital to almost halve the valuation it was seeking for Japan's Kioxia in an IPO, leading the U.S. buyout firm to scrap its plans for an October listing of the memory chipmaker, two sources said.
Germany is working to frustrate a possible takeover of one of its biggest banks by an Italian rival, a stance that pits Berlin against Rome and Europe's regulators, several people familiar with government and regulators' thinking told Reuters.
Samsung Electronics is not interested in spinning off its contract chip manufacturing business as well as its logic chip designing operation, Chairperson Jay Y. Lee told Reuters.
MCB Real Estate has sweetened its offer to acquire U.S. shopping center operator Whitestone REIT to $1.45 billion including debt, according to a letter reviewed by Reuters.
Northvolt is in talks with investors and lenders to secure about 200 million euros ($218 million) in short-term funding, three sources familiar with the matter said, as the Swedish maker of batteries for electric vehicles seeks to stabilise its finances.
Japanese payments company Infcurion is planning an initial public offering in Tokyo in 2025 as the company looks to accelerate its growth including through mergers and acquisitions, its executives told Reuters.
Investment banker John LaVoie is joining Citigroup C.N to head up its U.S. West Coast private equity dealmaking unit, according to an internal memo seen by Reuters.
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Have a wonderful weekend!
Best, Anirban
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Anirban Sen
Editor in Charge, U.S. Mergers & Acquisitions
Reuters News
Thomson Reuters
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