USA Rare Earth (USAR) Seals $2.8B Acquisition of Brazil’s Serra Verde Group

Key Takeaways

• USA Rare Earth (USAR) has finalized a $2.8 billion acquisition agreement for Serra Verde Group
• Transaction structure involves $300 million cash payment and issuance of 126.8 million new USAR shares
• Brazil’s Pela Ema mine is expected to deliver over 50% of non-Chinese heavy rare earth supply by 2027
• Combined entity forecasts roughly $1.8 billion in EBITDA by decade’s end
• USAR shares climbed 8.25% on news of the transaction

On April 19, USA Rare Earth entered into a binding acquisition agreement to purchase 100% of SVRE Holdings Ltd., which controls Brazil’s Serra Verde Group, in a transaction worth approximately $2.8 billion.

The deal’s payment structure combines $300 million in cash with approximately 126.8 million freshly minted USAR shares. Transaction completion is anticipated during Q3 2026, subject to shareholder ratification and regulatory approvals.

Serra Verde controls the Pela Ema mining operation located in Goiás, Brazil. This facility represents the Western Hemisphere’s inaugural operational ionic clay rare earth deposit and stands as Asia’s only rival capable of delivering all four essential magnetic rare earths at commercial volume.

USA Rare Earth Inc, USAR

Among these are premium heavy rare earth elements including dysprosium, terbium, and yttrium — components vital for military applications and sophisticated industrial uses.

Production at the Pela Ema facility commenced in 2024. By 2027, projections indicate it will provide over half of all heavy rare earth supply originating outside China, highlighting the deal’s strategic significance amid escalating U.S.-China friction over critical mineral dependencies.

Supporting the acquisition is a $565 million financial commitment from the U.S. International Development Finance Corporation (DFC), complemented by a comprehensive 15-year offtake contract with a U.S.-backed special purpose entity. The agreement incorporates minimum price guarantees for essential magnetic elements.

Financial Outlook and Performance Targets

USA Rare Earth anticipates Serra Verde will generate annual EBITDA between $550 million and $650 million by late 2027.

The merged enterprise aims to achieve approximately $1.8 billion in EBITDA by 2030. This represents an aggressive forecast for an organization whose 2025 revenue declined sharply and which still posts negative free cash flow.

Wall Street analysts presently assign USAR a Buy rating with a $25.00 target price. The company currently maintains a market capitalization near $4 billion.

According to merger provisions, all SVRE equity and specific warrants will be exchanged for cash and USAR stock. Performance-linked options will be replaced with restricted stock units contingent on continued employment.

Pre-existing voting arrangements guarantee backing from USAR stockholders controlling approximately 9% of shares outstanding.

Management Restructuring

Following deal completion, Serra Verde chairman Sir Mick Davis and chief executive Thras Moraitis will both assume seats on the USAR board.

Moraitis will additionally assume the President position at USA Rare Earth post-closing — representing a significant leadership appointment given his hands-on expertise scaling Serra Verde from inception through production phase.

Should stockholder consent fail under specified conditions, USAR must remit up to $75 million to Serra Verde as a breakup payment.

USA Rare Earth positions itself as a fully integrated rare earths enterprise, with assets spanning the Stillwater magnet manufacturing plant in Oklahoma and the Round Top development in Texas.

This transaction marks the firm’s second significant acquisition in recent quarters, and would establish its first ownership of an active mining operation in Brazil.

USAR shares advanced 8.25% on announcement day.

The post USA Rare Earth (USAR) Seals $2.8B Acquisition of Brazil’s Serra Verde Group appeared first on Blockonomi.