March 10, 2012 1:10 PM

Jones Day Advising Molycorp on $1.3 Billion Rare Earth Buy

Posted by Tom Huddleston Jr.

Molycorp, a Greenwood Village, Colorado–based miner of rare earth elements, has agreed to pay $1.3 billion to acquire Canada’s Neo Material Technologies, the companies announced on Thursday.

Molycorp owns the world’s largest rare earth deposit outside of China—the Mountain Pass mine in Southern California—while Neo Material processes rare earth elements to make magnetic powders used in components for fuel cells, glass, smartphones, and other electronic products.

The transaction has benefits for both companies: Neo Material gets direct access to raw materials, while Molycorp can take advantage of the Toronto-based target’s processing and distribution operations in Europe and Asia. The deal announcement specifically cites Neo Material’s presence in China, which, according to Mining Weekly, the world’s largest producer and consumer of rare earth elements.

The agreement calls for Molycorp to pay $8.13 and 0.122 of its own shares, for a total of $11.41, for each Neo Material share. Based on Thursday closing prices, the purchase price adds a 40 percent premium to value of Neo Material stock, Bloomberg notes. The deal is subject to shareholder and regulatory approval, and is expected to close before the end of this year’s third quarter.

Jones Day is advising Molycorp on the acquisition. The firm’s team is being led by Columbus, Ohio–based MA partner Jeffrey Little. He is joined by banking and finance partners Brett Barragate and Lewis Grimm; benefits and compensation partner Daniel Hagen; antitrust partners Bevin Newman and Johannes Zöttl; capital markets partners Christopher Kelly and Michael Solecki; MA partner Jessie Tang; and tax partner Colleen Laduzinski. John Ashburn, Jr., is Molycorp’s general counsel.

McCarthy Tétrault is serving as Canadian legal counsel to Molycorp on the deal with a team led by corporate and securities partner Michael Urbani. Corporate and securities partner Robin Mahood is also working on the deal. Partner Oliver Borgers is advising on foreign investment matters, while partner T.J. Kang is working on tax matters.

Fogler, Rubinoff and McDonald Hopkins are serving as legal counsel to Neo Material. Both firms declined to comment on the transaction.

Stikeman Elliot, meanwhile, is acting as counsel to a special committee of Neo Material’s board of directors of Neo Material. The firm’s team includes former firmwide chair Edward Waitzer, as well as corporate and securities partner Ivan Grbesic.

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