There has been a lot of mergers and acquisitions (M&A) activity happening in the lithium industry of late.

This includes Liontown Resources Ltd (ASX: LTR) rejecting the advances of Albemarle Corp (NYSE: ALB) and Allkem Ltd (ASX: AKE) announcing plans to merge with Livent Corp (NYSE: LTHM).

Chances are, this won’t be where M&A activity stops. But which ASX lithium shares could be next in line to receive an offer?

Which ASX lithium share will next receive a takeover approach?

While there has been a lot of talk of Core Lithium Ltd (ASX: CXO) being a potential target, this seems unlikely due to its valuation.

M&A activity is designed to unlock value, but Core Lithium’s valuation is well and truly unlocked… and some more.

Last month, Goldman Sachs highlighted that Core Lithium shares trade at ~1.4x net asset value (NAV) compared to a peer average of ~1.1x NAV. That’s despite “also having the lowest average operating FCF/t LCE.”

Its shares have risen 8% since then, making the premium even greater and (probably) ruling out a takeover approach.

What else?

So, what else is left? Well, one ASX lithium share that appears to be in the M&A crosshairs right now is Delta Lithium Ltd (ASX: DLI).

The lithium developer, recently known as Red Dirt Metals, is rumoured to be attracting interest from Mineral Resources Ltd (ASX: MIN) and Gina Rinehart’s Hancock Prospecting.

On Monday, Bell Potter commented:

Reportedly, DLI has been under accumulation by potential strategic investors, Hancock Prospecting Pty Ltd and Mineral Resources Limited (MIN, Buy, TP$95/sh).

DLI has several characteristics in common with other lithium developers that have been the subject of strategic investment. Mt Ida is a relatively near-term producer, given that it’s situated on a granted mining lease, with a submitted mining proposal. Early Yinnetharra exploration results (and DLI commentary) point to the potential of the project to host a Tier1 Resource and operation. And DLI is, so-far, unencumbered by a significant shareholding by a strategic investor.

Watch this space!

Incidentally, Bell Potter has a speculative buy rating and $1.05 price target on the ASX lithium share.

The post Which ASX lithium shares could be next to appear on the takeover radar? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 lithium stocks just downgraded by a top broker
• Up 125% in 2023, would I be mad to buy Liontown shares at today’s prices?
• Is it time to be a bull or a bear on Core Lithium shares?
• Core Lithium share price could be a long-term winner as critical metals steal the spotlight at G7 summit
• ASX 200 lithium shares could be winners as Biden calls critical clean energy metals the ‘third pillar of the Australia-US alliance’

James Mickleboro owns Allkem shares. 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.

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