Arcadium, the lithium producer set to be acquired by Rio Tinto, reported an 82% decline in quarterly income, falling short of Wall Street expectations due to lower prices for lithium, a key electric vehicle battery metal.
The lithium industry is currently experiencing a supply surplus, partly driven by slower EV adoption and increased production from China.
However, market analysts predict this imbalance will stabilize in the coming years, enhancing the value of Arcadium’s global lithium projects and prompting Rio Tinto’s $6.7 billion acquisition offer.
Rio Tinto’s CEO, Jakob Stausholm, initially approached Arcadium in June with an offer of $5.25 per share, which was declined by Arcadium’s board, as indicated in regulatory filings.
Following extended negotiations, Arcadium granted Rio access to sensitive business data, and eventually, the two companies agreed on a revised offer of $5.85 per share in cash. Reuters first reported the negotiations in early October.
“This transaction will allow us to accelerate and broaden our strategic goals,” stated Arcadium CEO Paul Graves on Thursday.
For the third quarter, Arcadium reported net income of $16.1 million, or 1 cent per share, down from $87.4 million, or 17 cents per share, in the same period last year. Analysts had forecasted earnings of 4 cents per share, according to IBES data from LSEG.
With the Rio acquisition expected to finalize next year, Arcadium announced it would not hold a conference call to discuss the quarterly results.
