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Allkem and Livent to merge

Global lithium chemicals companies Allkem and Livent have reached a definitive agreement to combine in an all-stock merger of equals valuing the combined company at $10.6 billion. The agreement is expected to close by the end of 2023. Allkem and Livent shareholders will hold about 56% and 44% respectively of the stock.

The two said that they will “combine their highly complementary range of assets, growth projects and operating skills across extraction and processing under a vertically integrated business model with the scale and expertise to meet the rapidly growing demand for lithium chemical products”. NewCo, as the combined company is currently known, will be headquartered in the US and will have assets in multiple regions. Among the benefits being claimed for it are:

* Enhanced business-critical scale and greater capacity

* A large, high-quality, low-cost asset footprint

* Multiple lithium chemical manufacturing facilities

* Security of supply through its Americas-based lithium platform

* The position to be a major battery-grade lithium supplier

* A growing global customer base across the electric vehicle and energy storage value chains, with strong customer relationships

* A highly complementary and vertically integrated business model

* Vertical integration across the lithium value chain

* Complementary expertise in brine and hydroxide processing

* Expansion of R&D capabilities

* A significant pipeline of advanced growth projects to create value for all stakeholders

* Complementary expertise in hard rock mining, conventional and DLE-based processes, and lithium carbonate and hydroxide production

Allkem and Livent expect about $125 million/year in cost synergies and one-off capex savings of about $200 million, in addition to other commercial synergies. Much of the former will come through removing duplicate costs, closer integration of operations, and improved procurement, site management, transport, and logistics functions at assets in Canada and Argentina.

On completion, Peter Coleman will become chairman, Paul Graves the CEO and Gilberto Antoniazzi the CFO, with a 14-strong board of directions, seven from each company. Allkem CEO, Martín Pérez de Solay, will provide consulting services to help facilitate a smooth integration process.

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