Questions emerge over Allkem, Livent merger likelihood A merger of Allkem and Livent could be jeopardised by the falling lithium price.By BRIDGET CARTER 9:15PM OCTOBER 12, 2023Liontown’s mooted takeover by a major American group may not be the only buyout at risk of not being completed as some doubts are starting to emerge whether Allkem’s merger with US-based Livent Group will be done too.Billionaire Gina Rinehart has been gradually creeping up the register of the Tim Goyder-backed Liontown, emerging with a 19 per cent stake on Wednesday only after Albemarle had been carrying out four weeks of due diligence following a $3-a-share offer for the company, valuing it at $6.6bn.Liontown said that while the due diligence was largely completed by Albemarle, it required a short extension, and has granted it an additional seven days – no doubt offering time to assess the game plan of Rinehart as a kingmaker in the deal with a major blocking stake.But some market observers have concerns elsewhere, in that a $US10bn merger between Allkem and Livent inked in May collapses on the back of the falling lithium price or is recut at a lower price.Allkem is yet to announce the date of a shareholder vote, expected to be by Christmas, but shareholders who will be paid in New York-listed shares from Livent, may now vote against the deal – with the price falling about 10 to 20 per cent from the offer that valued Allkem shares at about $15 each when announced in May.The terms involve Allkem shareholders getting one share of the new company for each share they hold and Livent shareholders 2.4 shares for each share, which the company said at the time was a 16 per cent premium to Allkem’s share price of $12.83.On Thursday shares in Allkem closed at $11.59 and Livent shares were US$17.81.It all makes interesting times in the market, with now three major corporate takeovers at risk of being recut: Brookfield’s takeover of Origin Energy, Allkem and Liontown.If there’s one thing that’s certain in the current conditions, it’s that there’s no certainty at all that a deal will be completed at the prices earlier agreed.One only has to look at those recently announced – namely the buyout of InvoCare by TPG Capital, where it lowered its bid from $13 a share to $12.70 – and Paine Schwartz Partners that sliced $100m off its offer of Costa Group.Another deal where commodity prices could prove a major factor is the sale of Incitec Pivot’s fertilisers unit, with the group in talks for a sale to Indonesia’s Pupuk Kaltim.While fertiliser prices are rising amid geopolitical instability, demand is weaker thanks to soft economic conditions, and the bet is that if the Indonesian group buys the business, it will be at a far lower price than some expect.A key date for the Origin Energy deal will be the release of the company’s independent expert report next week.After soaring profits from Origin, if the independent expert declares this justifies a higher price, Brookfield and EIG have no other choice but to pay up.But recutting a bid is a highly complex assignment when more than one bidder is in a consortium.
AKE Price at posting:
$11.98 Sentiment: Buy Disclosure: Held
