Merger of Equals - Post merger developments, A case for revising the propposed share exchange ratio.

List of matters for Allkem's BOD and Independent Advisors to consider.

1. James Bay resource saw a significant 173% increase to 110M tonnes, resulting in a corresponding 108% rise in NPV to US 2.9B. Should that be taken into account when advising shareholders?

2. Conversion margins have substantially contracted post-merger announcement, with Lithium Hydroxide spot prices in China and on the LME ( Fastmarkets) currently trading at approx US$22,000 indicating no premium and in China, it is at a discount. Furthermore, I have read that the market anticipates ongoing challenges due to significant upcoming conversion capacities being built outside of China. Hence depressed conversion margins are likely to persist for some period of time.

Carbonate prices have fallen from a high of US$80,000 to US$22,000 (approx.) but ALLkem's gross cash margin for carbonate is still extremely attractive at 77%.
Should the situation unexpectedly improve in the next 12-24 months, Allkem has additional conversion options eg expanded Naraha ( added attraction of Japanese Govt incentives?), and James Bay feedstock for a new conversion facility in Canada/USA if there is a need to go down that road with or without Livent.

3. The previously observed listing premium for US companies with lithium assets compared to Australian peers has recently diminished, rendering a US listing less compelling. Did Livent's market capitalization at the time indirectly influence the proposed exchange ratio, despite the ratio being determined based on risk-adjusted NAVs of both companies?

4. Allkem's latest standalone valuation, as valued by a dozen Brokers or so, ranging from A$10.90 to A$18.45 following the recent Sept Qtr briefing. It appears that the market is currently factoring in Allkem's share price post-merger based on the proposed share exchange of Livent's shares.
Based on its standalone valuation I believe Allkem's share price would not be impacted if the merger does not proceed in the event shareholders reject the proposed ratio and Allkem's share price would trade based on its own fundamentals.

I have read on this forum that merging with Livent would integrate Allkem's Argentinian carbonate into Livent's "US supply chain" and consequently make it eligible for IRA incentives. In my opinion, unless Argentina ( a non-FTA country) can successfully negotiate a separate agreement with the US similar to Japan's recent agreement the lithium carbonate if it is used in US-manufactured batteries will still not qualify for IRA incentives.

Would appreciate some of you sharing your thoughts ...

DYOR.