Which ASX lithium shares could be next to appear on the takeover radar?

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.