Lynas Rare Earths Ltd (ASX: LYC) shares are rising on Monday morning.
At the time of writing, the rare earths producer's shares are up 1% to $5.89.
Why are Lynas shares rising?
Investors have been bidding Lynas shares higher this morning after the company confirmed media reports that it has been in merger talks with a US counterpart.
This morning the company announced the following in response to media speculation:
Lynas confirms it has held confidential discussions with MP Materials Corp (NYSE: MP) regarding a potential transaction.
MP Materials owns and operates Mountain Pass, which is the only integrated rare earth mining and processing site in North America. Its mission is to restore the full rare earth supply chain to the United States of America.
During the third quarter of 2023, it reported 10,766Mt of REO production.
As of Friday's market close on Wall Street, MP Materials had a market capitalisation of A$4.7 billion. This is a touch lower than the Lynas market capitalisation of A$5.45 billion.
This means that if the two rare earths companies were to merge their operations, they would form a $10.15 billion industry giant.
However, it is worth noting that there is no guarantee that Lynas and MP Materials will merge their businesses in the future. Management advised that the transaction discussions between the two parties "are not ongoing."
The company's management then highlighted its organic growth plan. It concludes:
Lynas is implementing a strong organic growth plan. In addition, Lynas continues to seek opportunities to use our proven expertise to build scale, improve market functioning and add value for shareholders.
Despite today's gain, Lynas shares are still down a disappointing 35% over the last 12 months.
