Is this an explanation. . . A day on from an uneventful AGM the real business is afoot for Allkem (ASX:AKE) as it moves to finalise the merger with America’s Livent by early 2024. The companies are looking to combine in a deal that would create the world’s third biggest player by lithium volumes, at least once all of their myriad growth options are brought to market by later this decade.If successful, the merger would see Allkem’s ASX and TSX shares delisted by January 5, a day after the new company’s shares begin trading on the New York Stock Exchange. Its CDIs will be traded on the ASX.Allkem has received the vote of support it needed from independent expert Kroll Australia, releasing a scheme booklet for the December 19 meeting containing a report from Kroll that deemed the offer ‘fair’.They value Allkem at an equity value of between $12.76-15.41, well above the $9.22 trading value of the stock today, and placed the combined equity value of the group at between $9.79 and $11.43 billion.That’s well below the roughly $16b value trumpeted when it was originally announced roughly six months ago, but also comes after Allkem and Livent shares tumbled 26.1% and 38.2% lower over the period as lithium prices have dropped significantly.Allkem shareholders will emerge with 56.1% of the merged entity once the deal is done, while Livent – spawned from within lithium battery pioneer FMC Lithium – will hold 43.9%.Kroll thinks Allkem and Livent, to become a new lithium player known as Arcadium Lithium, will see $603-654m of synergies on a discounted cash flow basis, along with $200m in one times capex savings by being able to share infrastructure across its Sal de Vida and Salar de Hombre Muerto assets in Argentina and the James Bay and Nemaska Lithium deposits in Quebec.At Wednesday’s AGM at Perth’s Crown Towers, where shareholders will reconvene in a little over a month, Allkem’s Peter Coleman – who will become chairman of the merged vehicle –
NIS Price at posting:
9.8¢ Sentiment: Buy Disclosure: Held
