Why is Gina Rinehart buying Liontown shares?

Australia's richest woman has been buying a stake in this lithium share.

| More on:
A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The mystery buyer of Liontown Resources Ltd (ASX: LTR) shares has finally been revealed.

And it turns out that the rumours were true.

Who was buying Liontown shares?

According to an initial substantial shareholder notice released this morning, Gina Rinehart and Hancock Prospecting have been snapping up the lithium developer's shares.

The notice reveals that Rinehart had been buying the company's shares since back in April and finally crossed the 5% substantial shareholder threshold last week with a flurry of purchases in response to the Albemarle Corporation (NYSE: ALB) takeover offer.

This leaves Hancock Prospecting with a sizeable 7.72% stake in the lithium developer.

Why was it buying shares?

Hancock Prospecting has released a statement on its website explaining why it snapped up Liontown shares.

The miner explained that its investment was strategic and saw opportunities to support the project. It remains unclear whether this is through a partnership or a full takeover. Hancock explains:

Liontown is the owner of the Kathleen Valley lithium project in West Australia (Project). The Project is a prospective high quality hard-rock lithium deposit in its development phase, which whilst still having a number of significant risks including resource conversion, construction execution and metallurgical recovery, has the potential to operate at scale.

This Shareholding provides Hancock with a strategic stake in Liontown, giving Liontown the opportunity to leverage Hancock's expertise where it is of value to support the Project's development and subsequent operations. Hancock can contribute to Liontown's future direction alongside other Liontown shareholders, including in relation to potential investment opportunities for downstream value add in West Australia.

Hancock also revealed that it may seek a position on Liontown's board following its investment.

Liontown has not commented on the development.

Motley Fool contributor James Mickleboro 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 Scott Phillips.

More on Mergers & Acquisitions

A woman sits with a glass of milk in front of her as she puts a finger to the side of her face as though in thought while her eyes look to the side as though she is contemplating something.
Mergers & Acquisitions

Coles share price falls despite ACCC acquisition approval

Coles' $105 million dairy acquisition has been approved by the ACCC.

Read more »

Worker inspecting oil and gas pipeline.
Mergers & Acquisitions

Origin Energy share price tumbles on 'incomplete complex' revised takeover offer

Origin Energy shareholders will get to cast their votes on the contentious takeover proposal on Monday.

Read more »

Two CEOs shaking hands on a deal.
Mergers & Acquisitions

Wesfarmers share price rises amid latest acquisition news

The company has completed its latest acquisition.

Read more »

Close-up of a smiling man holding a jar containing nuggets of gold.

Guess which little-known explorer this ASX 200 gold stock is buying up

The junior ASX gold explorer has a promising pre-development project in Tanzania.

Read more »

A girl wearing a homemade rocket launches through the stars.
Small Cap Shares

Guess which ASX small-cap share is rocketing 24% after rejecting a takeover offer

This online beauty retailer is in the sights of a UK rival.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Energy Shares

Why you should vote your Origin shares in favour of its takeover

Brookfield believes investors should be accepting the offer that's on the table.

Read more »

A woman crosses her hands in front of her body in a defensive stance indicating a trading halt.
Energy Shares

Own Origin shares? Why you should vote against its takeover

AustralianSuper says investors should say no to a takeover.

Read more »

A young man stands facing the camera and scratching his head with the other hand held upwards wondering if he should buy Whitehaven Coal shares
Energy Shares

Origin Energy shares on watch amid takeover chaos

There has been a new twist in the Origin Energy takeover.

Read more »