Ann: Orocobre and Galaxy Merger - Announcement, page-597

..."But what I don’t understand is for example, at the time of the merger gxy was worth 4.50 and ore was worth 7.50 why we should not expect a share price of almost 12 dollars immediately after the merger. I will have a diluted amount of shares worth 7.50. it’s like gxy was worthless and never existed."

OK lets see if I can help explain how it works.

So if we work with the current share prices, for both companies, lets say, GXY = $4.48 and ORE = $7.89 then, to calculate the respective, number of shares, on issue, for both companies, we divide their respective current company Market Caps, by each of their respective current share prices.

So, for GXY, that's $2.23 Billion, divided by $4.48 giving, 497.767857 Million shares on issue.

And, for ORE, that's $2.661 Billion, divided by $7.89 giving, 337.262357 Million shares on issue.

(Keeping in mind that these are only 'approximate share numbers' based only, on the current $ calculations)

Now, if we change, the number of GXY shares ..currently, on issue, to the ..new number, that ..will, ..exist, in the name of the new 'merged companies', then we simply multiply the current, 497.767857 Million GXY shares, by 0.569, giving us, 283.229910 Million new, 'Merge-Co' shares.

And so, to find ..the price, of the 'Merge-Co' shares that will exist, ..at the exact ..micro-second, of the ..instant of amalgamation, of the two previous companies, we take the ..combined Market Caps (assuming here, the exact same current figures, we have been working with so far) and then divide that ..combined Market Cap figure, by the ..new, ..total number, of 'Merge-Co' shares that will exist, ..then.

So, $2.23 + $2.661 = $4.891 Billion, combined Market Cap, divided by 620.492267 Million 'Merge-Co' shares, results in a new 'Merge-Co' share price of, $7.89, per share.

As you can now see, the issue price, of the ..new 'Merge-Co' shares is based ..only, upon pure Mathematics. Simply the value of the combined company's Market Caps, divided, by the ..combined number, of new 'Merge-Co' shares, ie, the existing current number of ORE shares, and, 0.569 of the current, number, of GXY shares, as per the agreement documents of the Merger.

..."I will have a diluted amount of shares worth 7.50. it’s like gxy was worthless and never existed."

...No..!

If that was, the case, ie, ..."like gxy was worthless and never existed."

Then, the new 'Merge-Co' company's share price would, ..instead, be, ..just the ORE Market Cap, divided by the ..combined number, of the new 'Merge-Co' shares. So, $2.661 Billion, divided by a ..combined, 620.492267 Million 'Merge-Co' shares, resulting in a new (assuming GXY to be worthless) 'Merge-Co' share price of, ..just $4.28, per share.

So, you see, your ..new, "..(0.569) diluted amount of (Merge-Co) shares (now) worth $7.50" ..each, are ..now ..worth, ..EXACTLY, THE SAME, AMOUNT OF DOLLARS, as they ..were, ..just a micro-second ..before, the ..instant of amalgamation, of the two ..previous companies.

The, "Sixty-Four Dollar question" ..is ..what, are the new 'Merge-Co' shares, ..going to be worth, ..going forward, ..past, the ..initial, micro-second of the two companies amalgamation..??

The answer to that one, of course, is the exact same answer, to another similar question, ..."How long is a piece of string"...?

Personally I take comfort in the certain knowledge that the ..Synergy, of the two, ..combined Companies, will most certainly be far greater, than just, the Sum, of their, ..individual parts...!

And, as 'Merge-Co' will then be, the, ..'fifth largest Lithium producing company in the world', ..a world, where Lithium, ..is, the new 'equivalent of, Crude-Oil' and everyone, of the world's Lithium producers are desperately trying to service an insatiable growing global demand for it, I sleep very well every single night, owning my GXY shares, and I'm sure, that I'll sleep, even better, when owning the new 'Merge-Co' shares.

...The, "Sixty-Four Dollar question"....?? Hmmmm, $64 each, has very a nice ring to it..! Might be worth hanging onto them a bit longer yet..!!