I will probably choose the CDIs. I think it is more than likely that there will be too many CDI’s on issue to simply sell them during a future merger. In that case, we would most likely be looking at another scrip for scrip rollover. I’m no tax expert but a simple google shows that in the past the ATO have given CGT exemptions for rollovers from CDIs to underlying stock in other companies. It would likely only be a problem if your investment vehicle meant you couldn’t own US listed stocks.
It is also possible to convert CDIs to NewCo stock at any time after the merger. I’m not sure of the CGT implications on this, but cost will probably be reasonable for small shareholders like us. They are for others.
The other point to make is that the merger gives us increased scale, which makes takeovers of NewCo less likely as fewer companies can afford NewCo. Whilst BHP have said multiple times that they’re not interested in lithium, that was, however, when lithium prices were high. If they believe that there will be a sustained lithium price increases from 2028 onwards they might still lob a bid. AKE has the type of assets that BHP want (Low cost and long life). They could make an all cash offer at 34% premium and history from other stocks e.g OZL suggests that it will get through. At todays price that would be ~$11.50 per share. Works out cheaper than what they paid for OZL too.
AKE Price at posting:
$8.48 Sentiment: Buy Disclosure: Held
