Key Highlights
- USA Rare Earth (USAR) has entered into a definitive agreement to purchase Serra Verde Group for $2.8 billion
- Transaction structure consists of $300 million cash payment plus 126.8 million newly issued USAR shares
- Serra Verde’s Brazilian Pela Ema facility is forecast to account for over 50% of heavy rare earth supply from non-Chinese sources by 2027
- Projected combined EBITDA reaches approximately $1.8 billion by decade’s end
- Share price climbed 8.25% in response to the merger announcement
On April 19, USA Rare Earth finalized a binding agreement to purchase the entirety of SVRE Holdings Ltd., which serves as the parent entity for Brazil’s Serra Verde Group, through a transaction worth approximately $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 acquisition framework combines a $300 million cash component with the issuance of approximately 126.8 million new USAR shares. Completion of the transaction is anticipated during Q3 2026, subject to obtaining shareholder consent and meeting regulatory requirements.
Serra Verde operates the Pela Ema mining facility located in Goiás, Brazil. This site represents the Western Hemisphere’s first operational ionic clay rare earth project and stands as Asia’s sole competitor capable of delivering all four essential magnetic rare earths at commercial volume.
Among these are premium-grade heavy rare earth elements including dysprosium, terbium, and yttrium — essential components for military applications and sophisticated industrial uses.
Production at Pela Ema commenced in 2024. Projections indicate that by 2027, the facility will account for greater than 50% of heavy rare earth output from sources outside China, highlighting the acquisition’s strategic significance amid escalating U.S.-China competition over critical mineral resources.
Financial backing for the transaction includes a $565 million credit facility from the U.S. International Development Finance Corporation (DFC), complemented by a 15-year offtake arrangement guaranteeing 100% purchase by a U.S.-funded special purpose entity. Minimum pricing guarantees are established for critical magnetic materials.
Financial Outlook and Estimates
USA Rare Earth anticipates Serra Verde will generate annual run-rate EBITDA ranging from $550 million to $650 million by late 2027.
The merged entity is aiming for roughly $1.8 billion in EBITDA by 2030. This represents a bold forecast for an organization whose recent revenue performance has declined sharply and which maintains negative free cash flow generation.
Wall Street analysts presently assign USAR a Buy rating alongside a $25.00 price objective. The company currently commands a market capitalization near $4 billion.
According to merger provisions, all SVRE equity holders and specific warrant holders will receive consideration in cash and USAR equity. Performance-linked stock options will convert to restricted stock units contingent on ongoing employment.
Pre-existing voting commitments have secured backing from USAR shareholders controlling roughly 9% of the company’s outstanding equity.
Executive Appointments
Serra Verde’s chairman Sir Mick Davis and chief executive Thras Moraitis will both assume positions on the USAR board once the transaction concludes.
Additionally, Moraitis will assume the President position at USA Rare Earth upon deal completion — representing a significant management enhancement considering his hands-on expertise guiding Serra Verde from inception through commercial production.
Should stockholder ratification fail under specified conditions, USAR faces an obligation to remit up to $75 million to Serra Verde as a breakup payment.
USA Rare Earth positions itself as a comprehensively integrated rare earth enterprise, encompassing assets such as the Stillwater magnet manufacturing plant in Oklahoma and the Round Top development in Texas.
This transaction marks the company’s second significant acquisition in recent periods and would broaden its vertical integration strategy to incorporate an active Brazilian mining operation for the first time.
USAR shares advanced 8.25% following the deal disclosure.
