The Rio Tinto Ltd (ASX: RIO) share price is rising on Monday morning.
At the time of writing, the mining giant's shares are up slightly to $124.00.
What's going on with the Rio Tinto share price today?
Investors have been buying the miner's shares this morning after it confirmed speculation that it is looking to acquire Arcadium Lithium (ASX: LTM).
On Friday, Reuters reported that Rio Tinto was in talks with the lithium miner in London last week about a potential takeover. An offer in the region of US$4 billion to US$6 billion (or higher) has been touted according to sources.
Though, it is unclear whether a transaction would be cash, scrip, or a mixture of both. Arcadium Lithium has reportedly appointed two investment banks to handle its negotiations with Rio Tinto.
Arcadium Lithium shares rocket
This news led to Arcadium Lithium's NYSE listed shares surging 36% in extended trade on Wall Street, having already risen 10% during the session.
Unsurprisingly, Arcadium Lithium's ASX listed shares have now taken off in morning trade. At the time of writing, the lithium stock is up 46% to $6.10.
Why this deal?
While rival BHP Group Ltd (ASX: BHP) has shunned lithium in favour of copper and potash, Rio Tinto clearly sees a bright future for the battery making ingredient.
So much so, if Rio Tinto were to strike a deal with Arcadium Lithium, it would make the miner the third largest supplier of lithium in the world.
It currently owns the Jadar lithium project in Serbia, which management believes has the potential to be a world-class lithium-borates asset. The company has also invested in European-based battery technology and manufacturing company InoBat Auto to support the development of a battery ecosystem in Europe. This spans R&D, lithium mining, battery manufacturing and recycling.
So, with lithium prices potentially at the bottom of their cycle, the miner clearly sees now as a great time to add to its portfolio.
Response to speculation
This morning, Rio Tinto has responded to the takeover speculation with a very brief comment, which confirms that talks are ongoing but that no deal has been reached. It said:
Rio Tinto today confirmed that it has made an approach to Arcadium Lithium regarding a potential acquisition of Arcadium Lithium by Rio Tinto. The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed. Rio Tinto will not make further comment until or unless an update is appropriate.
