Lithium producer Allkem Ltd (AKE.AX) has agreed to merge with U.S.-based Livent Corp (LTHM.N) to create one of the world’s most valuable producers of the key raw materials used in electric-vehicle batteries.
The all-stock deal will create a $10.6 billion entity, the fifth-largest in the world after Albemarle Corp (ALB.N), Sociedad Quimica y Minera de Chile S.A. (SQMA.SN), Ganfeng Lithium Group (002460.SZ) and Tianqi Lithium Corp (002466.SZ).
ASX-listed Allkem produces lithium carbonate from its Sal de Vida facility in Argentina, which is near Livent’s Hombre Mureto lithium project. It also produces hard rock lithium in Australia and has a chemical conversion facility in Japan.
Livent, based in Philadelphia, supplies lithium products to multiple U.S. automakers, including General Motors Co (GM.N), Tesla Inc (TSLA.O) and BMW (BMWG.DE).
Shares of Livent reversed early gains. The stock was last trading down 1.9% at $23.76.
Under the deal, Allkem shareholders will get one share in the combined entity for each of their shares and the company will ultimately own 56% of the new firm. Livent shareholders will get 2.406 shares in the new firm for each existing share.
Benchmark lithium prices rallied sixfold over the two years to November but have since plunged, representing an opportunity for major EV battery makers to secure supplies for the coming decade to meet surging demand from automakers switching to electric vehicles.
Global demand for the metal is expected to surge more than fivefold by 2030.
Allkem – formed as a result of a scrip merger between Galaxy Resources and Orocobre in 2021, has a market capitalisation of A$8.23 billion ($5.58 billion).
Livent CEO Paul Graves will take the top job at the new entity while Allkem’s Peter Coleman will be the chairman. The company will be primarily listed on the New York Stock Exchange and seek inclusion on Australia’s benchmark S&P/ASX 200 index (.AXJO).
The deal is set to close by the end of 2023.
Australian lithium miners have been fending off takeover attempts by U.S.-based companies. In March, Liontown Resources (LTR.AX) rebuffed a A$5.50 billion buyout bid from Albemarle Corp.(ALB.N).
($1 = 1.4743 Australian dollars)