Livent and Allkem merge to create $10.6b global lithium chemicals company

Major lithium chemicals players Livent (NYSE: LTHM) and Allkem (ASX: AKE) have announced they will join forces in an all-stock merger of equals to create a $10.6 billion global production house.

The companies will combine their complementary range of assets, growth projects and operating skills across lithium extraction and processing under a vertically-integrated business model with the scale and expertise to meet rapidly-growing demand for lithium chemicals.

The new company — which is yet to be named — will have a significant footprint of low-cost assets across key geographies, products and customers.

Allkem and Livent operate lithium brine facilities in Argentina which are roughly 10 kilometres apart, and are both building hard rock lithium mines less than 100km apart in the Canadian province of Quebec.

Combining the companies is expected to help those projects develop faster and realise cost synergies and capital expenditure savings through co-development and de-risking.

Transformational deal

The new and transformational deal comes almost two years after Allkem was created through the merger of ASX-listed companies Orocobre and Galaxy Resources.

Allkem chief executive officer Martín Pérez de Solay said it marks a significant milestone in efforts to grow the company.

“We are bringing together two highly complementary businesses to create a leading global lithium chemicals company, building on our demonstrated track record of integration,” he said.

“This new company will improve the delivery of high-quality, value-added products to our diverse customer base and unlock material synergies… it brings together teams with strong expertise in project development, product innovation and marketing, and sets us up for a faster and de-risked delivery of the next phase of our growth.”

What lies ahead

Livent president and chief executive officer Paul Graves said he was excited for what lies ahead as Livent and Allkem combine forces to help power the transition to electric vehicles, cleaner energy and a more sustainable future.

“We look forward to playing an even bigger role in the acceleration of decarbonisation policies by providing the lithium needed to enable this critical global energy shift,” he said.

“As a combined company, we will have the enhanced scale, product range, geographic coverage and execution capabilities to meet the rapidly-growing demand for lithium chemicals… together we can accelerate our growth plans and deliver more lithium, more reliably and more quickly than either of us could do alone.”

Terms of the transaction

Under the terms of the transaction, Allkem shareholders will get one share in the combined entity for each of their shares and the company will ultimately own 56% of the new firm.

Livent shareholders will get 2.406 shares in the new firm for each existing share, for a total 44% equity.

Mr Graves will be chief executive officer of the new company, while Allkem director Peter Coleman will assume the role of chairman.

The board of directors will have 14 members, consisting of seven directors designated by Allkem and seven by Livent.

Commercial, operational and capital deployment teams will be comprised of representatives from both companies.

The company will be listed on the New York stock exchange and is expected to be headquartered somewhere in the US.

The transaction is expected to close by year end.