The Olaroz project. Source: Allkem
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  • Livent’s reverse acquisition of Allkem (ASX:AKE) will go ahead
  • The merger received approval from Australia’s competition regulator
  • Both companies have been touring world governments to win approvals
  • Shareholders like the move with shares up more than seven per cent at lunchtime AEDT

Allkem (ASX:AKE) shares climbed more than seven per cent to $9.28 at lunchtime today as Canberra approved its acquisition by Livent.

Livent is an international US-based lithium company headquartered in Philadelphia, Pennsylvania.

NYSE-listed Livent is effectively conducting a reverse acquisition of Allkem to get on the ASX.

To this end, Australia’s foreign investment regulator today approved the proposition for both companies to become Arcadium Lithium.

Arcadium will be a new holding company for the combined group that eventuates out of the merger.

The deal has been in situ for most of 2023. The issue is that Livent needed to win approval from multiple jurisdictions.

Global approval circuit complete

The merger has now been approved by regulators in Canada, China, Japan, South Korea, the USA, the UK, and the US.

“This represents all completion of foreign investment approvals that are expected to be required prior to completion,” Allkem wrote today.

A footnote on today’s release did highlight that Arcadium, when active, will need to seek approval from the Argentinian government.

Since May, Livent’s intentions have been clear.

The company intends to create a leading global lithium player with the potential to clock yearly earnings of in excess of US$1 billion.

Livent’s existing assets in Argentina and Canada correlate with those of Allkem’s and the US player is also eyeing an increase in yearly lithium output as Arcadium.

Management comment

The deal will see Allkem shareholders owning 56 per cent of Arcadia and Livent shareholders 44 per cent.

Allkem CEO Martin Perez de Solay said in May this year that the proposed merger boasted “compelling strategic logic”.

“We are bringing together two highly complementary businesses to create a leading global lithium chemicals company, building on Allkem’s demonstrated track record of integration,” he said.

“I believe Allkem shareholders will realize significant benefits from the Transaction as the business transforms into a truly global player with listings in the US and Australia.”

Shareholder reaction

At the time of its announcement, 16 different Australian stockbrokers rated Allkem a ‘Buy’; four a ‘Hold’; and one broker a ‘Sell’.

However, one-year returns were down 35.19 per cent.

Livent Corp boasts a US$2.53 billion market cap on the NYSE – but Allkem’s is bigger.

Allkem’s A$5.9 billion market cap translates to US$ 3.25 billion.

Allkem shares were up 7.54 per cent, trading at $9.27 at 12:39 pm AEDT.

AKE by the numbers
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