{"id":1201,"date":"2023-11-09T05:49:08","date_gmt":"2023-11-09T05:49:08","guid":{"rendered":"https:\/\/economicherald.net\/?p=1201"},"modified":"2023-11-09T05:49:08","modified_gmt":"2023-11-09T05:49:08","slug":"monsters-of-rock-allkem-merger-fair-and-all-the-rock-orica-blew-up-last-year","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=1201","title":{"rendered":"Monsters of Rock: Allkem merger \u2018fair\u2019 and all the rock Orica blew up last year"},"content":{"rendered":"<p>\u00a0<\/p>\n<p><strong>Allkem preps for Livent merger with shareholders to vote on December 19<\/strong><br \/>\n<strong>Independent expert gives support for \u2018fair\u2019 deal, recommending shareholders of the lithium miner take up the offer<\/strong><br \/>\n<strong>Mine explosives and chemicals supplier Orica boosts profit as it looks to future facing commodities for growth<\/strong><\/p>\n<p>\u00a0<\/p>\n<p>A day on from an uneventful AGM the real business is afoot for <a href=\"https:\/\/stockhead.com.au\/company\/allkem-ake\/\"><strong>Allkem (ASX:AKE)<\/strong><\/a> as it moves to finalise the merger with America\u2019s Livent by early 2024.<\/p>\n<p>The companies are looking to combine in a deal that would create the world\u2019s third biggest player by lithium volumes, at least once all of their myriad growth options are brought to market by later this decade.<\/p>\n<p>If successful, the merger would see Allkem\u2019s ASX and TSX shares delisted by January 5, a day after the new company\u2019s shares begin trading on the New York Stock Exchange. Its CDIs will be traded on the ASX.<\/p>\n<p>Allkem has received the vote of support it needed from independent expert Kroll Australia, releasing a scheme booklet for the December 19 meeting containing a report from Kroll that deemed the offer \u2018fair\u2019.<\/p>\n<p>They value Allkem at an equity value of between $12.76-15.41, well above the $9.22 trading value of the stock today, and placed the combined equity value of the group at between $9.79 and $11.43 billion.<\/p>\n<p>That\u2019s well below the roughly $16b value trumpeted when it was originally announced roughly six months ago, but also comes after Allkem and Livent shares tumbled 26.1% and 38.2% lower over the period as lithium prices have dropped significantly.<\/p>\n<p>Allkem shareholders will emerge with 56.1% of the merged entity once the deal is done, while Livent \u2013 spawned from within lithium battery pioneer FMC Lithium \u2013 will hold 43.9%.<\/p>\n<p>Kroll thinks Allkem and Livent, to become a new lithium player known as Arcadium Lithium, will see $603-654m of synergies on a discounted cash flow basis, along with $200m in one times capex savings by being able to share infrastructure across its Sal de Vida and Salar de Hombre Muerto assets in Argentina and the James Bay and Nemaska Lithium deposits in Quebec.<\/p>\n<p>At Wednesday\u2019s AGM at Perth\u2019s Crown Towers, where shareholders will reconvene in a little over a month, Allkem\u2019s Peter Coleman \u2013 who will become chairman of the merged vehicle \u2013 <a href=\"https:\/\/stockhead.com.au\/resources\/monsters-of-rock-allkem-flags-growth-over-dividends-ahead-of-livent-merger\/\">suggested the large growth profile of the new Arcadium meant dividends were unlikely to be on the table.<\/a><\/p>\n<p>\u00a0<\/p>\n<h2>Allkem (ASX:AKE) share price today<\/h2>\n\n<p><span class=\"mce_SELRES_start\"><\/span>\u00a0<\/p>\n<p>\u00a0<\/p>\n<h2>Orica profits run higher as \u2018future facing commodities\u2019 capture attention<\/h2>\n<p>Minesite explosives and chemicals supplier <a href=\"https:\/\/stockhead.com.au\/company\/orica\/\" target=\"_blank\" rel=\"noopener\">Orica (ASX:ORI)<\/a> was up today after delivering \u2018double digit growth\u2019 in its sales, NPAT and earnings, reporting a 16% lift in underlying NPAT to $369m and 12% rise in sales revenue to $7.95 billion.<\/p>\n<p>It announced a 25c per share dividend, with a full year FY23 payout of 43cps resembling a payout ratio of 53%. The largest share of revenue came from copper and future facing commodities including lithium, nickel, lead and zinc, with 24% of the company\u2019s earnings from miners operating in these fields, with 21% in gold.<\/p>\n<p>Met coal, around 7% of its commodity exposure, was the fastest growing segment of Orica\u2019s exposure, with quarry and construction activity in the US also reflected in a YoY rise to 14%, though thermal coal (also 14%) saw a decline year on year.<\/p>\n<p>All up Orica\u2019s net profit on a statutory basis rose from $60.1m in FY22 to $295.7m in FY23 despite its exit from Russia, with underlying earnings of 81.2c per share up 4.8c on the prior corresponding period.<\/p>\n<p>\u201cThe strategy we\u2019ve outlined in 2021 states that we\u2019ll focus on growing our exposure to future facing commodities, you see that in our product portfolio, now copper becomes really big and important to us,\u201d Orica MDs Sanjeev Gandhi told analysts on a results call today.<\/p>\n<p>\u201cWe\u2019ve now started looking at opportunities in lithium, especially here in Australia which is quite exciting, and the other strategic growth driver is our presence in emerging markets.<\/p>\n<p>\u201cWe\u2019ve seen significant success in Africa, you\u2019ve seen that in our results in the EMEA region (Europe, Middle East and Africa), LatAm continues to be a very, very attractive opportunity for us and then emerging markets in Asia like China and India are very attractive.\u201d<\/p>\n<p>Gandhi also flagged the growth of its digital solutions segment as a focus area for Orica, after reporting a 103% lift in EBIT to $54.3m in FY23.<\/p>\n<p>He also said the company was looking at opportunities to get into chemical supply for lithium refining and copper purification either by partnering with existing providers or setting up its own manufacturing base.<\/p>\n<p>\u201cThat\u2019s a work in progress and that\u2019s why the traffic light there is yellow and not green,\u201d he said.<\/p>\n<p>Gandhi cited an investment in <a href=\"https:\/\/stockhead.com.au\/company\/alpha-hpa-a4n\/\" target=\"_blank\" rel=\"noopener\">Alpha HPA (ASX:A4N)<\/a>, near its Yarwun ammonium nitrate plant in Queensland, as an example of its interest in engaging with processors in EV commodities.<\/p>\n<p>\u00a0<\/p>\n<h2>Orica (ASX:ORI) share price today<\/h2>\n\n<p><span class=\"mce_SELRES_start\"><\/span>\u00a0<br \/>\n<span class=\"et_bloom_bottom_trigger\"><\/span><\/p>\n<p>The post <a href=\"https:\/\/stockhead.com.au\/resources\/monsters-of-rock-allkem-merger-fair-and-all-the-rock-orica-blew-up-last-year\/\">Monsters of Rock: Allkem merger \u2018fair\u2019 and all the rock Orica blew up last year<\/a> appeared first on <a href=\"https:\/\/stockhead.com.au\/\">Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p>\u00a0 Allkem preps for Livent merger with shareholders to vote on December 19 Independent expert gives support for \u2018fair\u2019 deal, recommending shareholders of the lithium <a href=\"https:\/\/economicherald.net\/?p=1201\" class=\"read-more-link\">[more&#8230;]<\/a><\/p>\n","protected":false},"author":0,"featured_media":1202,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1201","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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