Analysts, including independent experts like KROLL, major players, HotCopper community members, and even those we might colloquially refer to as "wanker bankers," all share a commonality when it comes to evaluating the merger in question: they have opinions on its value. KROLL, in particular, explicitly expressed this in their independent assessment titled "SUMMARY OPINION."
However, the reality is that all these opinions might hold little weight if the broader market perceives things differently.
Turning our attention to the market's perspective, often referred to as the "wisdom of the crowd," regarding the values of AKE and Livent, a stark discrepancy becomes evident in the stock performance of both companies. This disparity is not only relative to each other but, more crucially, in comparison to their respective peer groups. AKE has outperformed the ASX Comparable Companies Index, signaling positive performance, while Livent has lagged behind its corresponding US Comparable Company Index, suggesting a less favorable performance.
Regardless of the reasons underlying the market's sentiments, the undeniable truth is that AKE and Livent (LTHM) are not viewed equally in the eyes of their respective markets. The ASX values AKE more favorably compared to its peers, indicating a positive outlook. On the other hand, the NYSE market rates Livent less favorably compared to its peers, indicating a less positive outlook.
The impending merger introduces a significant shift, as the newly formed entity (NewCo) is slated to be listed on the NYSE exchange. AKE, in essence, is transitioning from a market that views it as outperforming to one that deems Livent as underperforming. This transition poses a risk to every shareholder invested in AKE. Interestingly, this potential risk was not thoroughly assessed in the Scheme booklet or by KROLL.
The shift in markets prompts a crucial question for AKE shareholders: What aspects of the merger are compelling enough to align the NYSE market's opinion with the same positive quantile that AKE currently occupies on the ASX?
In my opinion, none of the potential benefits listed in support of the merger sufficiently justifies the risk associated with betting against how the NYSE market might evaluate the value of the new entity (NewCo).
Hence, F@#$ the merger!
AKE Price at posting:
$9.16 Sentiment: Buy Disclosure: Held
