Rio Tinto Group has struck a deal to acquire Arcadium Lithium Plc for $6.7 billion in an all-cash transaction, marking its biggest deal in 17 years. This acquisition, at $5.85 per share, represents a 90% premium to Arcadium’s closing price on October 4, prior to Rio’s confirmation of interest. Arcadium shares surged 31% in early New York trading on Wednesday following the news. This move positions Rio Tinto as a major player in the lithium market, an essential component for electric vehicle batteries. Rio's CEO Jakob Stausholm emphasized that this acquisition comes after a decade of little growth, underscoring the company's renewed focus on expanding its footprint in the battery metals sector.

With an oversupply of lithium driving down prices and sluggish electric vehicle sales impacting the market, Rio Tinto's purchase of Arcadium is well-timed. The deal provides Rio with immediate access to battery-grade lithium from direct extraction technology, bypassing the need for expensive processing plants. This acquisition will also help fund Arcadium’s lithium projects in China, Argentina, Canada, and Australia. Investors in Arcadium, which formed earlier this year through a merger, had expressed concerns about the sale's timing, but the deal offers shareholders immediate returns amid a challenging market.