Key Points
It's offering to purchase it in an all-stock deal valued at around $835 million.
If completed, the deal would give it full control of a highly promising asset in Greenland.
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Critical Metals (NASDAQ: CRML), a rare-earth and lithium miner, was a scorching hot stock on Monday. It agreed to buy a peer, a move that will give it 100% ownership of a major rare-earth play across the Atlantic Ocean. It was little wonder that investors were excited to hear the news; they collectively traded Critical Metals' stock up by nearly 26% that trading session.
Critical acquisition
Before market open, Critical Metals announced that it has signed a letter of intent to acquire all outstanding shares of peer European Lithium in an all-stock transaction.
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Under the American mining company's proposal, European Lithium investors would receive just under 0.04 shares of Critical Metals for each share of European Lithium they own. Critical Metals said this values the deal at roughly $835 million.
Owning, or at least possessing a significant majority in, European Lithium would give Critical Metals full ownership of Tanbreez, a major rare-earth deposit in Greenland. This, the company wrote in the press release divulging its European Lithium bid, "will simplify the ownership, decision making and financing strategy for Tanbreez as it is advanced toward a development decision."
Critical Metals said it expects the deal to close in the second half of this year. It is subject to approval by European Lithium shareholders.
The target company has not yet made an official pronouncement on the proposal. Last Thursday, it obtained a trading halt on its stock in Europe. That halt was put in place until tomorrow, April 28.
A very familiar peer
There is already a high degree of cross-ownership between the two companies, as European Lithium owns more than 45.5 million shares of Critical Metals, representing around 34% of the outstanding shares. The latter said in its press release that it intends to cancel these shares once the acquisition goes through.
Holding full control of both Tanbreez and European Lithium would be a very positive development for the company, especially considering the monster potential of the Greenland play. I believe this stock has an exciting future.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
