USA Rare Earth Completes Acquisition of Brazil's Serra Verde at Approximately $2.8 Billion Valuation

en.Wedoany.com Reported - On September 3, USA Rare Earth completed its acquisition of Serra Verde Group, with SVRE Holdings, the parent company of Serra Verde, being merged into a subsidiary of USA Rare Earth and becoming an indirect wholly owned subsidiary of USA Rare Earth upon completion of the transaction. According to documents filed with the U.S. Securities and Exchange Commission, the merger involved a cash payment of $300 million and the issuance of 126,849,307 shares of USA Rare Earth common stock to former Serra Verde shareholders and related rights holders. When the two parties signed the transaction agreement in April of this year, the implied value of the transaction, based on USA Rare Earth's stock price at that time, was approximately $2.8 billion.

The transaction brings Serra Verde's Pela Ema rare earth mine and processing facility in Goiás State, Brazil, into USA Rare Earth's asset portfolio. Pela Ema began production in January 2024 and is currently undergoing optimization and commissioning. Serra Verde can scale production of four magnetic rare earth elements—neodymium, praseodymium, dysprosium, and terbium—as well as other rare earth products such as yttrium. Following the completion of Phase 1 optimization, the company plans to increase the operational level of total rare earth oxide production to approximately 4,000 tonnes per year by the end of 2026. Construction of the Phase 2 expansion, targeting an average production capacity of 6,400 tonnes per year, is already underway, with commissioning scheduled to begin within the next 12 months.

During the progression of the transaction, the Administrative Council for Economic Defense of Brazil reviewed the corporate merger between USA Rare Earth and Serra Verde, along with related supply agreements. The authority subsequently closed its proceedings, determining that the transaction did not meet the revenue thresholds requiring mandatory prior notification under Brazilian law. USA Rare Earth shareholders approved the issuance of 126,849,307 common shares for the merger on August 28, clearing the equity issuance process for the closing on September 3.

Serra Verde also holds a 15-year offtake agreement for rare earth products, covering its Phase 1 production of neodymium, praseodymium, dysprosium, and terbium. In August, the special purpose entity responsible for executing the offtake completed a $1.55 billion capital arrangement, including $750 million in funding provided by the U.S. government and up to $500 million in senior debt financing committed by a major bank. Serra Verde expects to begin delivering mixed rare earth carbonate to the entity in early Q4 2026.

Concurrent with the closing of the acquisition, the combined entity assumed Serra Verde's existing financing arrangement with the U.S. International Development Finance Corporation of up to $565 million, comprising an initial loan of up to $465 million and an incremental loan of $100 million. The incremental loan was disbursed prior to the closing of the transaction, and the warrants corresponding to that financing were converted into the right to receive transaction consideration prior to the merger, with the related $100 million principal deemed settled under the closing arrangements.