Allkem and Livent hookup summary

[Sparty]

Australian lithium giant Allkem and US group Livent are merging to become the third-biggest lithium producer in the world with production expected to hit almost 250,000 tonnes by the end of 2027.

The merged group will provide customers with the full suite of lithium products, moving closer to their customers. Demand continues to build rapidly, but supply is being constrained by project delays and particularly cost overruns, due to surging construction costs and labour shortages. The proximity of the two companies' projects in Argentina and Canada means they can integrate their facilities, slash corporate costs, share infrastructure, and streamline procurement, engineering, and construction work.

The merger is forecast to be at least $US125m in annual synergies, with a one-off $US200m capital expenditure saving.

Lithium companies Allkem (ASX: AKE) and US-based Livent have today announced a US$10.6 billion (AUD$15.7 billion) ‘merger of equals’ that will create a global chemicals producer called NewCo.https://www.businessnewsaustralia.co...-producer.html

[Sparty]

• Australian lithium giant Allkem and US group Livent plan to merge in a $10.6bn all-scrip deal.
  
• The merger will create a new company that will become the third-largest lithium producer in the world, expected to produce almost 250,000 tonnes by the end of 2027*.
  
• The combination of the companies will be able to provide customers with the full suite of lithium products: spodumene, lithium carbonate, lithium hydroxide and a range of specialty products.
  
• The companies need to become one-stop-shops, offering greater amounts of a wider range of products from one source.
  
• Governments are increasingly incentivising local production in sectors reliant on critical minerals.
  
• The proximity of the two companies’ projects in Argentina and Canada means they can integrate their facilities, slash corporate costs, share infrastructure and streamline procurement, engineering and construction work.
  
• The result is forecast to be at least $125m in annual synergies, and a one-off $200m capital expenditure savings.
  
• The deal will create enough cash flow to fund its development projects without needing to tap shareholders or increase debt.

[Sparty]

Allkem and Livent announce definitive agreement to combine in an all-stock merger of equals valuing the combined company NEWCO at US$10.6 billion (A$15.7 billion)

The combination of the two companies will create a leading global lithium chemicals producer ("NewCo")

Key Highlights

Allkem (ASX:AKE) and Livent (NYSE:LTHM) announced the signing of a definitive agreement ("Transaction Agreement") 5/10/2023 to combine the two companies to create a leading global lithium chemicals producer ("NewCo"), (the "Transaction"). The Transaction is expected to close by the end of calendar year 2023, and upon closing of the all-stock merger of equals, Allkem shareholders will own approximately 56% and Livent shareholders will own approximately 44% of NewCo4.

Creates a leading global lithium chemicals producer, with pro-forma CY'22 combined revenue of approximately US$1.9 billion2 and adjusted EBITDA of approximately US$1.2 billion

Immediately enhances business-critical scale and global capabilities from closing, strengthening the ability to serve customers with a more resilient supply chain

Vertically integrated business model allows enhanced operational flexibility and potential for greater value capture across the value chain

Geographically adjacent, high quality, low-cost asset portfolio in Argentina and Canada creates opportunities to both accelerate and de-risk the development of a strong pipeline of attractive growth projects expected to deliver production capacity of approximately 250ktpa LCE by CY'27E3

Significant expected run-rate operating synergies of approximately US$125 million per annum (pre-tax) and one-time capital savings of approximately US$200 million, driven mainly by asset proximity and co-development in Argentina and Canada. Additional synergies expected beyond CY'27E

Strong combined balance sheet and cash flow generation provide financial flexibility to deliver accelerated growth plans

Enhanced value proposition for shareholders, customers, employees, and local communities, with an unwavering commitment to sustainability and responsible growth

Read full article: https://ir.livent.com/news/news-deta...r/default.aspx