Allkem and Livent Unite in $10.6 Billion Megamerger to Power Up Lithium Production

Argentina: On Wednesday, Allkem Ltd and Livent Corp, two leading Lithium companies, announced their merger in an all-stock deal worth $10.6 billion. This move aims to establish the world's third-biggest producer of Lithium, a crucial metal used in the production of electric vehicle batteries. With this merger, Allkem, based in Australia, and Livent, based in the U.S., will become an industry giant spanning four continents, with the collective talent and resources required to address the growing demand for Lithium from the automotive sector.

Combining Allkem and Livent would aid with accelerating the development of their respective Lithium projects by offering the necessary financial resources, technical expertise, and resource access. Allkem and Livent currently operate Lithium brine facilities located about 10 km (6.2 miles) apart in Argentina and are in the process of constructing hard rock Lithium mines within 100 km (62 miles) of each other in Quebec, Canada. By joining forces, the two companies can leverage their strengths and expedite the progress of these projects.

Allkem, known for producing hard rock Lithium in Australia and specializing in direct Lithium extraction (DLE), is set to merge with Livent by the end of 2023. The merger will result in the creation of a new entity, with Allkem shareholders receiving one share in the combined entity for each of their shares and the new company owning 56% of the firm. Livent shareholders, on the other hand, will get 2.406 shares in the new entity for each existing share. With DLE gaining popularity as a quicker method to mine battery metals, the merger presents an enticing opportunity for investors.

A new company has emerged with an impressive blend of mining and processing assets spanning the globe, signalling strong potential for growth. By the end of the decade, the company is set to become one of the largest and most durable Lithium producers on a global scale. Despite the current macroeconomic struggles in Argentina, the company's growth prospects in the region remain robust, particularly considering developments concerning a free trade agreement with the United States. The deal is expected to ensure the conformity of Argentine Lithium with the EV tax credits that constitute a critical component of the Biden administration's 2022 Inflation Reduction Act.

The proposed merger between Livent and Allkem is set to create the world's third-largest Lithium producer by volume, surpassing Ganfeng Lithium Group and Tianqi Lithium Corp. Despite having significant rivals, Allkem's recent stock price has not accurately reflected its growth potential, making it susceptible to opportunistic bids. Livent, which was created in 2018 after FMC Corp spun off its Lithium division, and Allkem, formed in 2021 following a merger between Galaxy Resources and Orocobre, are set to form a formidable alliance in the Lithium industry.