We, AKE shareholders are now at a crossroad. We have to decide whether AKE should keep going on its own or dissolve together with Livent to create a new company. This is a very serious decision to make because it will have a long lasting impact to our investment.
At present I am biased toward NO to the merger. But I am keen to read reasoned opinions on the pro and con, the yes and no, of this merger so that I can make a well informed decision when I cast my vote. That is why I start this new thread.
I will start it by presenting the reasons I am biased toward NO to the merger:
1/ AKE has been doing well on its own: it has been making profit, developing its projects, and has cash at hand;
2/ A complication in taxation: firstly we may have to pay CGT if ATO doesn't grant a class ruling for a delay to the CGT, secondly I am not sure whether I will be better off or worse off if my shares move to be under US taxation law;
3/ A complication with exchange rate: every time I want to know the value of my shares, if it is quoted in US$, I have to find the exchange rate of the day first;
4/ The risk of the devaluation of US$ because US' huge and increasing budget deficit and the diminishing dominance of the US$ as a global currency: if I am right (you see, I am still hesitating if I am right in working out the impact of exchange rate), if/when the value of US$ is down against AU$, that will bring down the value of my shares if/when I cash (sell) them;
5/ For political reasons, US may ban the sale of lithium to China, which happens to be the biggest market for lithium, as it bans the sale of semiconductor, for an example: if this happens the NewCo as a US company must comply and bear the loss of income if it can't sell to other countries;
6/ As an Australian company, AKE shareholders enjoy the protection of the law which prohibited a sly or sneaky takeover: there is no such protection in the US, as stated by KROLL:
3.3.4 Changes in shareholder protections (takeover laws) As a company incorporated under the laws of the Bailiwick of Jersey (Channel Islands), NewCo will nolonger be subject to Australian takeover laws that prevent a party from acquiring control of NewCo withoutmaking a takeover offer to all shareholders, or without seeking the approval of the NewCo Board.
Yes, it is mentioned that the new Board will "adopt certain takeoverdefence mechanisms". But I think the protection by law is priceless for the security of my pension;
7/ By going on its own, AKE keeps the door open for a takeover; it may happen it may not, just as with the hope for the NewCo realises fully and in time the benefits and synergiesof the merger, which is without risk;
8/ The NewCo may fail to integrade AKE and Livent to gain the benefits anticipated by the merger; does the track record of the would be CEO of the NewCo indicate that he would be able to pull it off?
AKE Price at posting:
$9.00 Sentiment: None Disclosure: Held
