Key Highlights
- USA Rare Earth (USAR) finalized an agreement to purchase Serra Verde Group through a $2.8 billion transaction combining cash and equity
- Transaction structure includes $300 million cash payment alongside issuance of 126.8 million new USAR shares
- Brazil’s Pela Ema mine operated by Serra Verde aims to deliver over 50% of heavy rare earths from sources outside China by 2027
- Projected EBITDA for the merged entity reaches approximately $1.8 billion by decade’s end
- Share price for USAR increased 8.25% upon deal disclosure
On April 19, USA Rare Earth entered into a binding agreement to purchase the entirety of SVRE Holdings Ltd., which controls Brazil’s Serra Verde Group, through a transaction valued at roughly $2.8 billion.
$USAR to acquire Serra Verde Group in a $2.8B deal, made up of $300M in cash and 126.849M new shares. The deal gives USA Rare Earth access to Brazil’s Serra Verde operation, which the company says is the only large-scale producer outside Asia of all four magnetic rare earths. pic.twitter.com/oX3o64c5Sh
— Wall St Engine (@wallstengine) April 20, 2026
The purchase arrangement involves a $300 million cash component alongside approximately 126.8 million freshly minted USAR shares. Completion of the transaction is anticipated during the third quarter of 2026, subject to stockholder authorization and regulatory approval.
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 sole competitor capable of delivering all four essential magnetic rare earths at commercial scale.
The portfolio encompasses high-value heavy rare earth elements including dysprosium, terbium, and yttrium — components essential for defense systems and sophisticated industrial technologies.
Pela Ema commenced operations during 2024. Projections indicate the facility will account for more than half of all heavy rare earth supply from non-Chinese sources by 2027, emphasizing the transaction’s strategic significance amid continuing geopolitical friction between the United States and China regarding critical mineral access.
The acquisition receives support from a $565 million financing commitment provided by the U.S. International Development Finance Corporation (DFC), complemented by a comprehensive 15-year offtake arrangement with a U.S.-capitalized special purpose vehicle. Protective price floors apply to essential magnetic elements.
Financial Outlook and Targets
USA Rare Earth anticipates Serra Verde will generate annualized run-rate EBITDA ranging from $550 million to $650 million upon reaching the conclusion of 2027.
The unified organization sets its sights on roughly $1.8 billion in EBITDA by 2030. This represents a substantial objective for an organization whose 2025 revenue performance weakened significantly while maintaining negative free cash flow generation.
Market analysts presently assign USAR a Buy recommendation alongside a $25.00 target valuation. The equity currently commands a market capitalization approaching $4 billion.
According to merger provisions, all SVRE equity and specific warrant instruments will convert into cash proceeds and USAR stock. Performance-linked option grants will transform into restricted stock units contingent upon ongoing employment.
Current voting agreements guarantee backing from USAR stockholders controlling roughly 9% of shares outstanding.
Executive Appointments
Serra Verde’s chairman Sir Mick Davis alongside CEO Thras Moraitis will both assume positions on the USAR board of directors once the transaction concludes.
Moraitis will simultaneously accept the President position at USA Rare Earth when the deal finalizes — representing a significant leadership enhancement considering his hands-on expertise guiding Serra Verde from inception through active production.
Should stockholder consent fail to materialize under specified conditions, USAR bears responsibility for paying Serra Verde a termination fee reaching $75 million.
USA Rare Earth positions itself as a comprehensive rare earths enterprise featuring vertical integration, maintaining operations that span the Stillwater magnet production facility in Oklahoma alongside the Round Top development in Texas.
This transaction marks the firm’s second substantial acquisition during recent months, broadening that vertical integration strategy to encompass an active Brazilian mining operation for the first time.
USAR equity advanced 8.25% during the announcement session.
