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Shares of Arcadium Lithium ( ALTM ) are soaring in premarket trading Wednesday, after Rio Tinto ( RIO ) announced plans to acquire the lithium miner for $5.85 per share in an all-cash deal.

The transaction, which boosts the Anglo-Australian miner's access to a key ingredient of electric vehicle (EV) batteries, values Arcadium at $6.7 billion.

Arcadium shares have jumped since last week, following a report that Rio Tinto could be looking to buy a company in the lithium sector. The two companies confirmed Rio Tinto's approach this weekend.

Arcadium Deal a 'Counter-Cyclical Expansion' Amid Lower Lithium Prices

Rio Tinto Chief Executive Officer (CEO) Jakob Stausholm called the deal a "counter-cyclical expansion," with the lithium business combining with the miner's "leading aluminium and copper operations to supply materials needed for the energy transition."

Lithium prices have been under pressure amid cooling EV demand.

The companies expect the deal to close in mid-2025, following approvals from Arcadium shareholders.

Arcadium itself is less than a year old, created in January from the merger of smaller miners Allkem and Livent.

Arcadium shares surged 31% in premarket trading at $5.54 following the announcement, putting them on track to their highest open since March. Rio Tinto's American depositary receipts (ADRs) were down 1.5% to $65.65.

Read the original article on Investopedia .