Merger: Yes or No, page-480

c. You may believe that a Superior Proposal for Allkemmay emerge in the future, if Allkem were to continueas a standalone entity

You may believe that there is the potential for aSuperior Proposal for Allkem to be made in theforeseeable future and perhaps beyond the timing forcompletion of the Transaction, such as a takeover bidor an alternative control proposal that is ultimatelymore favourable to Allkem Shareholders as a whole. (Scheme Booklet page 18)

Yes, I do believe that.

Accepting the merger means to give away the "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" and to accept the NewCo Board's takeoverdefence mechanisms, which is "designed to avoid control of NewCo passing without NewCoBoard or shareholders’ approval and thereby protect against non-negotiated takeover bids made at unfairor inadequate prices or which rely on coercive or unfair tactics" (Scheme Booklet 260).

So the Australian takeover laws and the takeover defence mechanisms seem to have the same intent. Then why do I have losing the Australian takeover laws as my sixth reason to say NO to the merger when it will be replaced by takeover defence mechanisms?

The reason is there are some aspects of the mechanisms which make me concerned.

Section 8 of the Scheme Booklet is about Risk Factors. And Section 8.3 is about Risk factors relating to the Scheme and the Scheme Consideration, which mentions provisions of the laws of the Bailiwick of Jersey and theNYSE Listing Rules. The one that is relevant to takeover defence mechanisms is Section 8.3 bb. in page 182. It says: (my comments are in bold italics and in brackets)

"bb. Provisions of the NewCo articles of association could delay or prevent a takeover of NewCo by a third party

The NewCo articles of association could delay, defer or prevent a third party from acquiring NewCo, despite any possible benefit to NewCo’s shareholders, after closing of the Transaction, or otherwise adversely affect the price of NewCo Shares. For example, the NewCo articles of association will:

("despite any possible benefit to NewCo's shareholders" shows that the first priority is not the benefit of the shareholders)

i. permit the NewCo Board to issue one or more series of preferred shares with rights and preferences designated by the NewCo Board; (Wow! That is the privilege of a Monarch!)

ii. impose advance notice requirements for shareholder proposals and nominations of directors to be considered at shareholder meetings; (This is to make it harder for shareholders to make proposals and nominations at shareholder meetings.)
iii. limit the ability of shareholders to remove directors without cause; (This is putting the burden of proof on shareholders instead of on the directors who don't perform as expected.)
iv. require that all vacancies on the NewCo Board be filled by the NewCo Directors; (It is a closed shop; it leads to a practice of covering up each other's malpractice.) and
v. prohibit certain business combinations with an “interested” shareholder/member unless approved by the NewCo Board. (I don't know what it means exactly.)

These provisions may discourage potential takeover attempts, discourage bids for NewCo Securities at a premium over the market price (gone is the dream of getting a premium from takeover!) or adversely affect the market price of, and the voting and other rights of the holders of, the NewCo Securityholders. These provisions could also discourage proxy contests and make it more difficult for NewCo Securityholders to elect directors other than the candidates nominated by the NewCo Board (the NewCo Board seems to have an absolute power)."

What I get from reading Section 8.3 bb. above is that the NewCo Board is given so much power that the shareholders' fate is at their mercy. It scares me because it is said "Power tends to corrupt and absolute power corrupts absolutely."