Ionic Rare Earths (ASX:IXR) share price leaps 11% on acquisition news

It’s a big day in the green so far for the ASX rare earths company.

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The Ionic Rare Earths Ltd (ASX: IXR) share price is taking off after the company announced its plan to acquire a rare earth technology developer.

The company has entered into a binding term sheet to purchase Seren Technologies Limited (SerenTech). It is now undergoing due diligence for the acquisition.  

At the time of writing, the Ionic Rare Earths share price is 4.55 cents, 10.98% higher than its previous close.

Let’s take a closer look at the takeover offer.  

Ionic Rare Earth share price soars on proposed acquisition

The market’s bidding the Ionic Rare Earths share price higher after the company announced an acquisition set to cost upwards of US$2.5 million.

SerenTech is a private company based in the United Kingdom. It has developed a unique rare earth separation technology.

The technology uses multifunctional amide ionic liquids to separate and refine rare earth elements. The resulting products have had more than 99.99% rare earth oxide purity at pilot scale.

Additionally, it can refine to high purity levels using mining ore concentrate or permanent magnet recycling.

It has demonstrated it can separate magnet rare earths – neodymium, praseodymium, dysprosium, and terbium – for modest capital requirements.

As a result, the company believes the technology will allow it to sell recycled magnetic rare earths to key markets in the United States, Europe, and Asia.

Under the acquisition’s terms, the company will pay US$1 million cash to SerenTech’s owners.

It will also provide them with 48 million new shares. If valued at 4.4 cents apiece, the shares are worth US$1.5 million.

On top of that, the deal could see Ionic Rare Earths paying the sellers 2 milestone payments, together worth up to US$1.5 million.  

The acquisition is conditional on Ionic Rare Earths completing its due diligence. It’s expected to go ahead in the second quarter of 2022.

Right now, the Ionic Rare Earths share price is 170% higher than it was at the start of 2021.

What did management say?

Ionic Rare Earths managing director Tim Harrison commented on the technology:

[SerenTech will advance] the company’s plan to unlock additional value from the unique critical and heavy rare earth basket to be produced at Makuutu.

Importantly, there is immediate potential to roll out a strategy incorporating permanent magnet recycling into the near-term activities of the company, providing an interim step to help bridge the gap between production at Makuutu and going downstream with our own dedicated separation and refining asset.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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