European Lithium Ltd (ASX: EUR) has confirmed it plans to merge with its joint venture partner, Critical Metals Corp (NASDAQ: CRML), in a deal that will value it at more than $1 billion.
Image source: Getty Images
Significant takeover premium
Under the proposal, Critical Metals would acquire European Lithium in a scrip deal, offering 0.035 of its shares for each European Lithium share, valuing European Lithium at 58 cents per share.
This is more than a 100% premium from the closing price of 28.5 cents before European Lithium shares were placed in a trading halt last Friday.
European Lithium shareholders would own 45% of the combined company once the deal goes through.
European Lithium said in its statement to the ASX on Tuesday that the combination of the two companies would give shareholders exposure to "a NASDAQ-listed company with significantly higher liquidity and investor demand''.
It also points out that European Lithium's largest asset is its 34% interest in Critical Metals.
As well as that relationship, the companies are joint venture partners in the Tanbreez rare earths project in Greenland, which Critical Metals owns 92.5% of and European Lithium the remainder.
The proposal is non-binding at this stage, and both companies have agreed to negotiate exclusively with one another, "to complete due diligence and execute a binding scheme implementation deed by 7 May 2026''.
Deal represents good value
European Lithium has established an independent board committee (IBC) to assess the merits of the deal.
European Lithium Independent Director and IBC Chair Michael Carter said:
This transaction will deliver substantial value to EUR shareholders, priced at a 136% premium. The combination will enable EUR shareholders to directly own interests in Critical Metals Corp. which will be strategically positioned as the sole owner of the Tanbreez rare earth project in Greenland and will benefit from substantial cash balances and a portfolio of critical minerals development opportunities.
European Lithium said the proposal was non-binding at this stage and shareholders did not need to take any action.
European Lithium said regarding the Tanbreez rare earths project that it was "an advanced, permitted asset poised to become a cornerstone in the global supply of rare earth elements for North America and Europe''.
Critical Metals also owns 100% of the Wolfsberg lithium project in Austria.
This was, European Lithium said, "a fully licensed, government-backed lithium mine built by the Austrian government and primed to play a central role in the region's integrated lithium-ion battery supply chain''.
European Lithium shares were 57.9% higher in early trade at 45 cents.
