USA Rare Earth, Inc. (NASDAQ: USAR) saw its stock rise 6% on Monday following the company’s announcement of a definitive agreement to acquire Serra Verde Group in a transaction valued at roughly $2.8 billion.
The acquisition package is made up of $300 million in cash plus 126.849 million newly issued USAR shares, a share count calculated using USA Rare Earth’s closing price of $19.95 on Friday. The companies said the transaction is targeted to be completed in the third quarter of 2026, and closing remains contingent on receiving required regulatory approvals.
Serra Verde is the owner and operator of the Pela Ema rare earth mine and downstream processing facility in Goiás, Brazil. The operation moved into production in 2024 after more than $1.1 billion of capital investment. Serra Verde’s asset is described as the only producer outside Asia capable of delivering all four magnetic rare earths at commercial scale, including the heavy rare earth elements Dysprosium, Terbium and Yttrium.
To support further plant optimization and planned expansion through to positive cash flow, Serra Verde secured a financing package of $565 million from the U.S. International Development Finance Corporation. In addition, the operation has a 15-year offtake agreement with a special purpose vehicle that is capitalized by various U.S. government agencies and private capital sources. That agreement covers 100% of Phase 1 production of Neodymium, Praseodymium, Dysprosium and Terbium and includes guaranteed minimum floor prices for each of those elements.
At Phase 1 nameplate capacity, which the companies expect to reach by the end of 2027, Serra Verde is projected to produce about 6,400 metric tons per year of total rare earth oxides. Based on sales of 100% separated oxides, Serra Verde is forecast to achieve an annualized run-rate EBITDA in the range of $550 million to $650 million by the end of 2027.
Looking further ahead, the combined company is expected to generate approximately $1.8 billion of EBITDA in 2030 with around 80% cash flow conversion. Pro-forma liquidity for the merged entity is stated to be about $3.2 billion, a figure that includes cash on hand and access to milestone-based loan facilities.
Context and implications
The transaction brings together USA Rare Earth’s processing platform and Serra Verde’s producing mine and plant in Brazil, consolidating production and downstream processing capabilities under a single owner. The deal also incorporates structured financing and a long-term offtake commitment intended to underpin early production volumes and revenue floors for key magnetic rare earth elements.
Next steps
- Completion of regulatory reviews and approvals required for the transaction to close in the third quarter of 2026.
- Implementation of optimization and expansion programs at Pela Ema supported by the secured $565 million financing package.
- Achievement of Phase 1 nameplate capacity targeted by the end of 2027 and realization of the projected run-rate EBITDA.