Allkem Ltd (ASX:AKE, OTC:OROCF, TSX:AKE)'s shareholders have endorsed the proposed all-scrip merger with Livent Corp (NYSE:LTHM), setting the stage for the creation of one of the largest lithium companies globally. The merger, valued at US$10.6 billion, received a significant vote of confidence with 89% of proxies cast, representing 72% of the total register, backing the deal during the recent shareholder meeting in Perth. This move is pivotal in a year that has seen intense competition for lithium resources, despite falling prices for the metal crucial to decarbonisation efforts.
The union of Allkem and Livent's mining and processing facilities is expected to form a vertically integrated entity, unique in its capacity to supply to the automotive industry and other sectors reliant on advanced battery technology. If Livent's shareholders, who are scheduled to vote soon, approve the merger, it will lead to the formation of Arcadium Lithium. Peter Coleman, chairman of Allkem, is poised to become the chairman of this new entity, with Livent's CEO Paul Graves stepping in as CEO.
The proposed structure of the combined entity will see Allkem shareholders holding a majority stake of about 56%. However, some dissent has been noted among Allkem investors, with notable entities like Ausbil and AustralianSuper voting against the merger.
Consolidated portfolio
The consolidation aims to enhance Allkem's vertical integration, evolving from primarily an upstream producer to a more comprehensive player in the lithium market. This strategic shift is a response to the increasing demand for lithium, essential for battery production. The merger also signifies a significant geographical expansion, combining Allkem's Australian and Argentinian assets with Livent's operations in North America and China.
The newly formed Arcadium Lithium will have an extensive portfolio, including Allkem's Mount Cattlin mine in Western Australia and exploration tenements near Kambalda, as well as Livent's Hombre Muerto lithium brines project in Argentina. Despite political shifts in Argentina, Coleman remains confident in the new group's resilience and independence.
The finalization of this landmark merger, subject to approval from Livent's US shareholders, is expected to occur in early January, marking a significant milestone in the global lithium industry.