Allkem Ltd and Livent Corp have agreed to an all-share merger worth $US10.6 billion that will see the Western world’s third-largest producer of the primary metal used to make electric vehicle batteries.
Under the deal, which is set to close by the end of 2023, Allkem shareholders will get one share in the combined entity for each of their shares and they will ultimately own 56% of the merged company. Livent shareholders will get 2.406 shares in the new firm for each existing share.
The news of the merger overnight will set ASX-listed lithium stocks alight today – look at what happens to the share prices of Pilbara Minerals, Core Lithium, IGO, Mineral Resources, Liontown (even though it is under a $5.2 billion offer from Albemarle).
When complete, the new company will rank behind Albemarle of the US and SQM of Chile globally. Tianqi, the Chinese lithium company with substantial investments in Australia would be larger, as would Pilbara Minerals, in terms of market cap.
Shares of Livent were up about 5.2% to $US25.40 by the close Wednesday in New York. Allkem’s shares closed up 0.6% at $12.91 on the ASX on Wednesday afternoon, before news of the merger broke.
By merging, US-based Livent and Australia-based Allkem will create a lithium powerhouse with interests on four continents mining and supply spodumene for lithium refineries to supply the likes of Tesla, General Motors and BMW.
It will be a more integrated company than Pilbara Minerals, for example.
Allkem and Livent operate lithium brine facilities in Argentina that are roughly 10 kilometres apart, and in the Canadian province of Quebec they are both building spodumene rock lithium mines less than 100 km apart.
Allkem also produces spodumene in Australia, has a chemical conversion facility in Japan, and is an expert in the growing technology of direct lithium extraction (DLE), which is increasingly seen as a better way of producing more of the battery metal faster than the traditional brine or hard rock mining and refining methods.
