Li-Cycle shares surge 55% as Glencore expresses interest in potential acquisition

Li-Cycle's shares surged 55% after Glencore Canada expressed interest in acquiring the lithium-ion battery resource recovery firm. Glencore stated it is committed to working quickly to align on the acquisition structure and terms. The news has boosted Li-Cycle's stock and potentially sets the stage for a major deal in the lithium-ion battery market.

Li-Cycle Holdings Corp. (NYSE: LICY), a pioneering lithium-ion battery resource recovery company, witnessed a remarkable surge of 55% in its shares on March 12, 2024 [1]. The catalyst behind this significant market reaction was none other than Glencore plc (LON: GLEN), a prominent global producer, recycler, and marketer of nickel and cobalt for lithium-ion batteries, expressing its interest in acquiring the company. Glencore's commitment to working expeditiously to align on the acquisition structure and terms has further fueled market speculation, potentially setting the stage for a major deal in the burgeoning lithium-ion battery market.

The news of this potential acquisition builds upon the existing long-term partnership between Li-Cycle and Glencore, with Glencore's previous investment of $75 million in June 2022 demonstrating its endorsement of Li-Cycle's innovative Spoke & Hub model, patented recycling technology, and development plans for the Rochester Hub [1]. In addition to this investment, the Note Purchase Agreement amends an existing Glencore convertible note, providing for an extended maturity, market-based re-pricing, and granting of security interest in two future tranches [1].

Li-Cycle's co-founder and CEO, Ajay Kochhar, expressed his enthusiasm about the financing enhancement, stating that it "improves Li-Cycle's liquidity position while we continue our ongoing comprehensive review process" [1]. This financing not only strengthens Li-Cycle and Glencore's existing partnership but also represents an interim step in Li-Cycle's funding strategy, positioning the company to support its future plans in the production of critical battery materials.

Tim Johnston, Li-Cycle's co-founder and Executive Chairman, also commented on the company's ongoing review of its global recycling network and go-forward strategy for the paused Rochester Hub. With the demand for critical battery materials continuing to accelerate, Li-Cycle aims to position itself as a future leader in the production of critical battery materials through its sustainable, safe, and patented recycling technology [1].

Kunal Sinha, Glencore's Global Head of Recycling and a Non-Executive Director of Li-Cycle's Board of Directors, reiterated Glencore's commitment to bringing scalable and sustainable circularity into the supply chain of battery materials. This potential acquisition aligns with Glencore's ambition to increase its presence in the recycling industry and further solidify its role as a key player in the lithium-ion battery market [1].

As the world continues to transition to renewable energy sources, the demand for lithium-ion batteries and their critical components is expected to grow exponentially. The potential acquisition of Li-Cycle by Glencore could prove to be a strategic move, not only for both companies but also for the entire lithium-ion battery industry.

[1] Li-Cycle Announces $75 Million Strategic Investment from Glencore. (2024, March 12). Retrieved from https://li-cycle.com/press-releases/li-cycle-announces-75-million-strategic-investment-from-glencore/

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