{"id":3291,"date":"2023-12-15T05:55:54","date_gmt":"2023-12-15T05:55:54","guid":{"rendered":"https:\/\/economicherald.net\/?p=3291"},"modified":"2023-12-15T05:55:54","modified_gmt":"2023-12-15T05:55:54","slug":"monsters-of-rock-lithium-merger-of-equals-not-a-great-deal-for-allkem-shareholders-say-analysts","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=3291","title":{"rendered":"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts"},"content":{"rendered":"

Will Allkem (ASX:AKE)<\/a> shareholders vote \u2018yay\u2019 or \u2018nay\u2019 to the ~US$11bn lithium merger with Livent (NYSE:LTHM) on 19 December?<\/p>\n

Announced in May,<\/a> the so-called \u2018merger of equals\u2019 would create the world\u2019s third biggest player by lithium volumes, at least once all their growth options are brought to market by later this decade.<\/p>\n

If successful, the deal would see AKE\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.<\/p>\n

Its CDIs will be traded on the ASX.<\/p>\n

Earlier this year, AKE said major shareholder Toyota was \u201cquite positive\u201d<\/a> about the deal, a view not shared by 3.3% holder Ausbil who will reportedly vote no<\/a> on December 19.<\/p>\n

\u00a0<\/p>\n

Deal \u2018undervalues\u2019 AKE\u2019s contribution: Jarden<\/strong><\/h2>\n

Ben Lyons and Jon Bishop from investment bank Jarden say the value of Allkem\u2019s merger deal with Livent heavily favours the latter.<\/p>\n

AKE shareholders are being asked to choose between retaining exposure to 100% of the existing AKE assets, or 56.1% of the combined business, to be named Arcadium Lithium.<\/p>\n

The merger makes sense, Jarden says, but the current deal undervalues AKE\u2019s contribution to the new company.<\/p>\n

An Independent Expert Report (IER) sanctioned by AKE opined that AKE is contributing 54.5-56.4% in equity to the new company, which overlaps the proposed merger ratio.<\/p>\n

\u201cWe calculate that AKE is contributing ~57% of the equity value to [merger company] Arcadium, and the proposed merger ratio (~56.1%) does not therefore fully reflect the value of the assets that AKE contribute to the merger,\u201d Lyons and Bishop say.<\/p>\n

\u201cOf concern, we see for AKE shareholders is the potential for capital to subsequently flow to the primary listing on the NYSE, reducing liquidity on the ASX, and effectively result in a reverse takeover of AKE, for little control premium (in our opinion).\u201d<\/p>\n

LTHM management will also assume dominant roles within Arcadium, including the role of MD\/CEO.<\/p>\n

\u201cTherefore, a secondary question we see for AKE SHs to consider is whether the proposed Arcadium merger potentially becomes less investible than AKE,\u201d Lyons and Bishop say.<\/p>\n

\u201cAt a very blunt and base level, we also note AKE contributes ~73% of Arcadium Resources, ~53% of Reserves, ~58% of FY23 production, ~66% of guided CY27 production capacity, and ~56% of FY23 NPAT.<\/p>\n

\u201cAKE brings control of three world class brine resources to the transaction, whilst LTHM brings one.\u201d<\/p>\n

\u00a0<\/p>\n\n

\ufeff<\/span>\ufeff<\/span><\/span>\u00a0<\/p>\n

Combining AKE and LTHM assets still makes sense<\/h2>\n

Jarden values the targeted synergies at ~US$740m, which results in a more valuable Arcadium Lithium than the sum of its precursor parts.<\/p>\n

\u201cWe find the industrial logic of combining the AKE and LTHM portfolios to be compelling, with several of the assets complementary, geographically proximal, and providing opportunities for enhanced operational and financial performance,\u201d Lyons and Bishop say.<\/p>\n

\u201cWhilst M&A in the resources sector is typically less conducive to the realisation of meaningful synergies, we cannot argue against the strong industrial logic of bringing together the complementary and proximal portfolio assets of AKE and LTHM (specifically SdHM \u2044 Fenix \u2044 Sal de Vida in Argentina and James Bay \/ Whabouchi \/ Becancour in Quebec).<\/p>\n

Despite being sold a little short on the merger ratio on our numbers, we estimate the transaction is still ~5.3% accretive to AKE valuation by virtue of the expected synergies.\u201d<\/p>\n

<\/span><\/p>\n

The post Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

Will Allkem (ASX:AKE) shareholders vote \u2018yay\u2019 or \u2018nay\u2019 to the ~US$11bn lithium merger with Livent (NYSE:LTHM) on 19 December? Announced in May, the so-called \u2018merger [more…]<\/a><\/p>\n","protected":false},"author":0,"featured_media":3292,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-3291","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nMonsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts - Economic Herald<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/economicherald.net\/?p=3291\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts - Economic Herald\" \/>\n<meta property=\"og:description\" content=\"Will Allkem (ASX:AKE) shareholders vote \u2018yay\u2019 or \u2018nay\u2019 to the ~US$11bn lithium merger with Livent (NYSE:LTHM) on 19 December? Announced in May, the so-called \u2018merger [more...]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/economicherald.net\/?p=3291\" \/>\n<meta property=\"og:site_name\" content=\"Economic Herald\" \/>\n<meta property=\"article:published_time\" content=\"2023-12-15T05:55:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/economicherald.net\/wp-content\/uploads\/2023\/12\/wef-End73u.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"675\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291\"},\"author\":{\"name\":\"\",\"@id\":\"\"},\"headline\":\"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts\",\"datePublished\":\"2023-12-15T05:55:54+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291\"},\"wordCount\":578,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/economicherald.net\\\/wp-content\\\/uploads\\\/2023\\\/12\\\/wef-End73u.jpeg\",\"articleSection\":[\"Finance\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/economicherald.net\\\/?p=3291#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291\",\"url\":\"https:\\\/\\\/economicherald.net\\\/?p=3291\",\"name\":\"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts - Economic Herald\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/economicherald.net\\\/wp-content\\\/uploads\\\/2023\\\/12\\\/wef-End73u.jpeg\",\"datePublished\":\"2023-12-15T05:55:54+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/economicherald.net\\\/?p=3291\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291#primaryimage\",\"url\":\"https:\\\/\\\/economicherald.net\\\/wp-content\\\/uploads\\\/2023\\\/12\\\/wef-End73u.jpeg\",\"contentUrl\":\"https:\\\/\\\/economicherald.net\\\/wp-content\\\/uploads\\\/2023\\\/12\\\/wef-End73u.jpeg\",\"width\":1200,\"height\":675},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/?p=3291#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/economicherald.net\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/#website\",\"url\":\"https:\\\/\\\/economicherald.net\\\/\",\"name\":\"Economic Herald\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/economicherald.net\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/#organization\",\"name\":\"Economic Herald\",\"url\":\"https:\\\/\\\/economicherald.net\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/economicherald.net\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/economicherald.net\\\/wp-content\\\/uploads\\\/2023\\\/10\\\/cropped-cropped-economicheraldlogo-1.png\",\"contentUrl\":\"https:\\\/\\\/economicherald.net\\\/wp-content\\\/uploads\\\/2023\\\/10\\\/cropped-cropped-economicheraldlogo-1.png\",\"width\":850,\"height\":760,\"caption\":\"Economic Herald\"},\"image\":{\"@id\":\"https:\\\/\\\/economicherald.net\\\/#\\\/schema\\\/logo\\\/image\\\/\"}}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts - Economic Herald","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/economicherald.net\/?p=3291","og_locale":"en_US","og_type":"article","og_title":"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts - Economic Herald","og_description":"Will Allkem (ASX:AKE) shareholders vote \u2018yay\u2019 or \u2018nay\u2019 to the ~US$11bn lithium merger with Livent (NYSE:LTHM) on 19 December? Announced in May, the so-called \u2018merger [more...]","og_url":"https:\/\/economicherald.net\/?p=3291","og_site_name":"Economic Herald","article_published_time":"2023-12-15T05:55:54+00:00","og_image":[{"width":1200,"height":675,"url":"https:\/\/economicherald.net\/wp-content\/uploads\/2023\/12\/wef-End73u.jpeg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/economicherald.net\/?p=3291#article","isPartOf":{"@id":"https:\/\/economicherald.net\/?p=3291"},"author":{"name":"","@id":""},"headline":"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts","datePublished":"2023-12-15T05:55:54+00:00","mainEntityOfPage":{"@id":"https:\/\/economicherald.net\/?p=3291"},"wordCount":578,"commentCount":0,"publisher":{"@id":"https:\/\/economicherald.net\/#organization"},"image":{"@id":"https:\/\/economicherald.net\/?p=3291#primaryimage"},"thumbnailUrl":"https:\/\/economicherald.net\/wp-content\/uploads\/2023\/12\/wef-End73u.jpeg","articleSection":["Finance"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/economicherald.net\/?p=3291#respond"]}]},{"@type":"WebPage","@id":"https:\/\/economicherald.net\/?p=3291","url":"https:\/\/economicherald.net\/?p=3291","name":"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts - Economic Herald","isPartOf":{"@id":"https:\/\/economicherald.net\/#website"},"primaryImageOfPage":{"@id":"https:\/\/economicherald.net\/?p=3291#primaryimage"},"image":{"@id":"https:\/\/economicherald.net\/?p=3291#primaryimage"},"thumbnailUrl":"https:\/\/economicherald.net\/wp-content\/uploads\/2023\/12\/wef-End73u.jpeg","datePublished":"2023-12-15T05:55:54+00:00","breadcrumb":{"@id":"https:\/\/economicherald.net\/?p=3291#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/economicherald.net\/?p=3291"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/economicherald.net\/?p=3291#primaryimage","url":"https:\/\/economicherald.net\/wp-content\/uploads\/2023\/12\/wef-End73u.jpeg","contentUrl":"https:\/\/economicherald.net\/wp-content\/uploads\/2023\/12\/wef-End73u.jpeg","width":1200,"height":675},{"@type":"BreadcrumbList","@id":"https:\/\/economicherald.net\/?p=3291#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/economicherald.net\/"},{"@type":"ListItem","position":2,"name":"Monsters of Rock: Lithium \u2018merger of equals\u2019 not a great deal for Allkem shareholders, say analysts"}]},{"@type":"WebSite","@id":"https:\/\/economicherald.net\/#website","url":"https:\/\/economicherald.net\/","name":"Economic Herald","description":"","publisher":{"@id":"https:\/\/economicherald.net\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/economicherald.net\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/economicherald.net\/#organization","name":"Economic Herald","url":"https:\/\/economicherald.net\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/economicherald.net\/#\/schema\/logo\/image\/","url":"https:\/\/economicherald.net\/wp-content\/uploads\/2023\/10\/cropped-cropped-economicheraldlogo-1.png","contentUrl":"https:\/\/economicherald.net\/wp-content\/uploads\/2023\/10\/cropped-cropped-economicheraldlogo-1.png","width":850,"height":760,"caption":"Economic Herald"},"image":{"@id":"https:\/\/economicherald.net\/#\/schema\/logo\/image\/"}}]}},"_links":{"self":[{"href":"https:\/\/economicherald.net\/index.php?rest_route=\/wp\/v2\/posts\/3291","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/economicherald.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/economicherald.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/economicherald.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3291"}],"version-history":[{"count":0,"href":"https:\/\/economicherald.net\/index.php?rest_route=\/wp\/v2\/posts\/3291\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/economicherald.net\/index.php?rest_route=\/wp\/v2\/media\/3292"}],"wp:attachment":[{"href":"https:\/\/economicherald.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3291"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/economicherald.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3291"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/economicherald.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3291"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}