CATL To Sell Shares Worth USD 406M in Pilbara Minerals Ltd.

CATL, the world's largest battery manufacturer, has sold a nearly 5% stake in Pilbara Minerals Ltd for A$601 million ($406 million), according to a term sheet reviewed on Thursday.

CATL purchased its 4.9 percent stake for A$0.30 cents per share in the midst of the 2019 lithium downturn. It sold the stake, which amounted to 146 million shares, in a block trade for A$4.10 per share, earning CATL A$555 million from its initial investment. The deal's bookrunners were Goldman Sachs and UBS.

CATL and Pilbara Minerals did not immediately respond.

The sale has no bearing on the battery manufacturer's access to Pilbara's lithium supply. Pilbara has agreed to a five-year offtake agreement with battery chemicals manufacturer Yibin Tianyi, in which CATL has a significant stake.

Given that CATL's lithium access is secure, industry sources believe the sale was more likely motivated by the desire to book profits amid a drop in lithium and its producer prices.

"At face value, you'd think their expectation is that prices will fall," said analyst Dan Morgan of investment bank Barrenjoey in Sydney.

CATL has offered smaller Chinese electric-vehicle makers discounted battery prices for terms that include a built-in assumption that prices of lithium carbonate, a key component in auto batteries, would more than halve, according to sources last month.