Allkem, an Australian lithium producer, experienced a significant increase of over 14% on Thursday following the announcement of a merger with Livent, a U.S-based company.
This merger will result in the creation of the third-largest producer of the key component used in electric-vehicle batteries, with a total value of $10.6 billion.
The shareholders of Allkem will receive one share in the new firm for each of their shares. The new firm will be owned 56% by the company and the remaining percentage will be owned by Livent.
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The deal is expected to complete by the end of 2023, and the merged entity will be listed on the NYSE and headquartered in the United States.
“We see the transaction as value accretive,” analysts from RBC wrote in a research note.
“It presents operational synergies from complementary assets, scale benefit and further vertical integration and possible long-term asset/technology upside,” they added.
Toyota, the top shareholder of Allkem, expressed its optimism regarding the proposed $10.6 billion partnership with Livent Corp on Thursday.
There has been an increase in demand for lithium and related components due to companies seeking to expand their portfolios towards sustainable energy.
Allkem and Livent have lithium brine facilities located approximately 10 km (6.2 miles) apart in Argentina, as well as in the Canadian province of Quebec.
