Allkem and Livent announce
definitive agreement to
combine in an all-stock
merger of equals valuing the combined company at US$10.6 billion
(A$15.7 billion)1
Key Highlights
- Creates a leading global lithium chemicals producer, with
pro-forma CY’22 combined revenue of approximately US$1.9 billion2
and adjusted EBITDA of approximately US$1.2 billion
- Immediately enhances business-critical scale and global
capabilities from closing, strengthening the ability to serve
customers with a more resilient supply chain
- Vertically integrated business model allows enhanced
operational flexibility and potential for greater value capture
across the value chain
- Geographically adjacent, high quality, low-cost asset portfolio
in Argentina and Canada creates opportunities to both accelerate
and de-risk the development of a strong pipeline of attractive
growth projects expected to deliver production capacity of
approximately 250ktpa LCE by CY’27E3
- Significant expected run-rate operating synergies of
approximately US$125 million per annum (pre-tax) and one-time
capital savings of approximately US$200 million, driven mainly by
asset proximity and co-development in Argentina and Canada.
Additional synergies expected beyond CY’27E
- Strong combined balance sheet and cash flow generation provide
financial flexibility to deliver accelerated growth plans
- Enhanced value proposition for shareholders, customers,
employees, and local communities, with an unwavering commitment to
sustainability and responsible growth
Allkem (ASX:AKE) and Livent (NYSE:LTHM) today announced the
signing of a definitive agreement (“Transaction Agreement”) to
combine the two companies to create a leading global lithium
chemicals producer (“NewCo”), (the “Transaction”). The Transaction
is expected to close by the end of calendar year 2023, and upon
closing of the all-stock merger of equals, Allkem shareholders will
own approximately 56% and Livent shareholders will own
approximately 44% of NewCo4.
Allkem and Livent, two global lithium chemicals companies, 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. The combined company will have a significant footprint of
low-cost assets diversified across key geographies, products, and
customers. Given the proximity of certain assets in Argentina and
Canada, significant cost synergies and capex savings, in addition
to other anticipated commercial synergies, are expected to be
realized from the opportunity to co-develop and de-risk future
expansion projects and operations.
Livent is a global leader in lithium processing technologies
with nearly eight decades of experience producing a diverse range
of lithium chemicals for energy storage and other specialty
applications. Allkem brings complementary expertise in conventional
brine-based lithium extraction, hard rock mining, and lithium
processing. With Livent’s technical and commercial capabilities and
its deep customer relationships, and Allkem’s large and diverse
resource base and significant growth pipeline, NewCo will be
well-positioned to capitalize on the expected growth in lithium
demand from electric vehicles (“EVs”) and energy storage
solutions.
Livent’s President and Chief Executive Officer, Paul Graves,
said: “I am excited for what lies ahead as Livent and Allkem
combine forces to help power the transition to EVs, cleaner energy
and a more sustainable future. We look forward to playing an even
bigger role in the acceleration of decarbonization policies by
providing the lithium needed to enable this critical global energy
shift. As a combined company, we will have the enhanced scale,
product range, geographic coverage, and execution capabilities to
meet our customers’ rapidly growing demand for lithium chemicals.
This transaction will capitalize on our highly complementary
business models and our collective strengths, including our
best-in-class technologies, assets, and people, to be a leading
force in our industry driving growth in EV and energy storage
applications. Together we can accelerate our growth plans and
deliver more lithium, more reliably, and more quickly, than either
of us can do alone. Jointly, we are committed to growing
responsibly and supporting the communities where we operate, and we
look forward to executing on our shared long-term vision.”
Allkem’s Chief Executive Officer, Martín Pérez de Solay, said:
“The combination of Allkem and Livent is transformational with
compelling strategic logic and marks a significant milestone in our
efforts to grow the company. 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. The vertically integrated NewCo will improve
delivery of high-quality, value-added products to our diverse
customer base and unlock material synergies. The combination brings
together teams with strong expertise in project development,
product innovation, and marketing, and sets us up for a faster and
de-risked delivery of the next phase of our growth. 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. We will maintain our joint
commitment to safety, quality, and productivity and through
increased scale we can also improve outcomes for our employees,
customers, partners, and the communities in which we operate.”
Strategic Benefits of
the Combination
- Creates a leading global
lithium chemicals producer with enhanced business-critical scale
and greater capacity to meet growing customer demand
- Large, high quality, low-cost asset footprint with one of the
world’s largest lithium deposit bases
- Multiple lithium chemical manufacturing facilities able to
deliver a broad range of lithium performance chemicals
globally
- Increased economies of scale and resources through NewCo’s
geographically adjacent asset portfolios in Argentina and North
America
- Leading Americas-based lithium platform with ability to serve
growing regional demand amid customer focus on assured security of
supply and more localized supply chains
- Positioned to be a leading battery-grade lithium supplier
- Large and growing global customer base across EV and energy
storage value chains, with strong customer relationships from both
companies
- Highly complementary and
vertically integrated business model
- Enables vertical integration across the lithium value chain
with the broadest product offering
- Highly scalable across both resource and production assets;
expected to immediately enhance operational flexibility and
reliability, resulting in lower cost and greater value capture
- Complementary expertise in brine and hydroxide processing with
proven ability to produce high-quality products that are sought
after by leading battery manufacturers and EV OEMs
- Expansion of R&D capabilities to develop innovative and
sustainable products and processes
- Greater capacity and execution
expertise to accelerate growth
- Allows delivery of growth commitment faster and de-risks path
to approximately 250ktpa LCE by CY’27E5
- 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
- Creating a global leader to
capture the decarbonization opportunity through EV and battery
storage solutions
- Sector-leading ESG policies with a shared commitment to grow
responsibly and pursue best practices across environmental
stewardship, sustainability, community development, and corporate
governance
- Participation in industry efforts to advance transparency,
safety, responsible operations, rigorous supply chains, and
community engagement and development
Significant Financial Benefits
The combination is expected to create substantial value for the
shareholders of both companies through:
- Value creation from the
synergistic combination and close proximity of assets, with
additional synergies expected beyond CY’27E
- Estimated run-rate operating cost
synergies of approximately US$125 million (pre-tax) per annum from
SG&A, asset optimization, and logistics and procurement
savings. A significant portion of the synergies are expected to be
realized through removing duplicate costs, improvement of
procurement, site management, transport, and logistics functions at
Sal de Vida, Hombre Muerto, and Québec, and through closer
integration of operations. The majority of the annual run-rate
pre-tax operating cost synergies are expected to be realized within
three years
- Further synergies are expected to be
realized from the sharing of technological expertise, improved
flexibility in product flows, plant optimization, and enhanced
marketing efficiencies
- In addition to operating synergies,
NewCo is expected to realize approximately US$200 million in
one-time capital expenditure savings, driven by the consolidation
of shared infrastructure, streamlining construction and
procurement, and leveraging complementary engineering work at
Hombre Muerto and Sal de Vida, as well as at a co-located spodumene
to hydroxide facility processing materials from the Québec
spodumene resources.
- Transaction metrics
- Exchange ratio determined based on each
Company’s estimated relative contribution to risk-adjusted net
asset value (“NAV”) (pre-synergies)
- Transaction is expected to be
immediately accretive to both Livent’s and Allkem’s shareholders on
a NAV per share basis, reflecting the material synergies expected
to be realized from the Transaction (net of costs to achieve)
- The transaction results in Allkem
shareholders owning approximately 56% of NewCo compared to 53%
implied by the volume weighted average share prices over a
one-month period.6
- Stronger financial profile
positions the combined entity to deliver growth
- Strong balance sheet with combined
liquidity of US$1.4 billion and limited indebtedness7
- Positive cash flow generation provides
the financial strength needed to accelerate the growth
strategy
- Greater liquidity for
investors and more diversified shareholder
base
- Greater liquidity for investors through
a primary listing on the New York Stock Exchange (“NYSE”) and a
foreign exempt listing on the Australian Securities Exchange
(“ASX”) via CHESS Depository Interests (“CDIs”)
- Seeking US index inclusion on implied
combined market capitalization and pro-rata CDI inclusion in the
S&P / ASX 200 index
Tax-free all-stock transaction
- Share for share exchange transaction
expected to be a tax-free transaction for shareholders
Transaction Structure
NewCo will have a primary listing on the NYSE and maintain a
foreign exempt listing on the ASX (via the issue of CDIs to Allkem
shareholders). Under the terms of the Transaction, existing Allkem
shareholders will receive one NewCo ASX listed CDI (or be able to
elect to receive one NewCo NYSE listed share instead of a CDI) for
each Allkem ordinary share held, except for shareholders in certain
ineligible jurisdictions, who will receive cash proceeds from the
sale of the NewCo CDIs in lieu of such CDIs after closing. Under
the Merger, Livent shareholders will receive 2.406 NewCo NYSE
listed shares of common stock for each Livent share held. Following
the Transaction, Allkem and Livent shareholders are expected to own
approximately 56% and 44% of the combined company,
respectively.
Governance and
Leadership
The Transaction Agreement and the Transaction have been
unanimously approved by the Board of Directors ofeach company, and
in the case of Allkem, subject to the Independent Expert
concluding, and continuing to conclude, that the Scheme is in the
best interest of Allkem shareholders.
The combined company will benefit from proven and experienced
business leaders at both the Board and executive levels, along with
diverse, high-performing teams at NewCo’s operating sites.
NewCo is to be incorporated in the Bailiwick of Jersey, with
corporate headquarters to be in North America, with the exact
location and company name to be announced at a later date, and
corporate residency to be in Ireland.
Upon completion of the Transaction, Peter Coleman will become
the Chairman of NewCo, Paul Graves will become the CEO of NewCo,
and Gilberto Antoniazzi will become the CFO of NewCo. The NewCo
Board will have 14 members, consisting of 7 directors designated by
Allkem and 7 directors designated by Livent. The commercial,
operational, and capital deployment teams will be comprised of
representatives from both companies. Allkem CEO, Martín Pérez de
Solay, will provide consulting services to NewCo to help facilitate
a smooth integration process post transaction close.
Closing Conditions, Other Key Terms
and Timing
Closing of the Transaction is subject to the satisfaction or
waiver of customary closing conditions, including receipt of
regulatory approvals, approval by both Livent and Allkem
shareholders, the Independent Expert concluding that the Scheme is
in the best interest of Allkem shareholders and not changing,
withdrawing, or qualifying that conclusion, tax opinion delivery,
and Australian tax class ruling confirmation, and Australian Court
approval.
Allkem and Livent shareholders do not need to take any action at
this time. An explanatory statement and notice of meeting
containing important information about the Scheme (“Scheme
Booklet”) will be dispatched to Allkem Shareholders and released on
ASX in due course, likely in the second half of calendar year 2023.
A proxy statement/prospectus containing important information about
the Merger will be dispatched to Livent Shareholders and filed with
the U.S. Securities and Exchange Commission (“SEC”) in due course.
Subject to the satisfaction or waiver of the conditions to closing,
the Transaction is expected to close by the end of calendar year
2023.
The Transaction Agreement includes reciprocal exclusivity
arrangements (including notification obligations) in favour of both
parties, a matching right regime in favour of both parties and
termination fees in favour of both parties. The exclusivity
arrangements are subject to customary exceptions that enable the
directors of Allkem and Livent to comply with their respective
fiduciary and / or statutory duties.
The full terms of the Transaction, including the closing
conditions, are set out in the Transaction Agreement, a copy of
which is attached to this announcement.
Advisors
Gordon Dyal & Co., LLC. is acting as exclusive financial
advisor and Davis Polk & Wardwell LLP and Allens are acting as
legal counsel to Livent.
UBS Securities Australia Limited and Morgan Stanley & Co.
LLC are acting as financial advisors and King & Wood Mallesons
and Sidley Austin LLP are acting as legal counsel to Allkem.
Analyst and
Investor Briefing
Livent and Allkem will each host a conference call for their
respective analysts and investors in the U.S. and Australia.
Management from both companies will participate.
The Livent hosted joint conference call will be held at 8:00 AM
Eastern time to discuss the transaction. Participants can access
the call via webcast at
https://events.q4inc.com/attendee/784082116. The live webcast and
related presentation materials can be accessed through the Investor
Relations section of the website ir.livent.com and will be archived
for a period of 12 months.
The Allkem hosted joint conference call will be held at 9:30 AM
AEST on May 11th to discuss the transaction. Participants can
access the call via webcast at
https://registrations.events/direct/OCP60313. The live webcast and
related presentation materials can be accessed through the Investor
Relations section of the website allkem.co/investors and will be
archived.
For more information on this announcement, please refer to the
transaction website: www.globallithiumleader.com.
Livent Contacts
Investors: Daniel Rosen +1 215 299
6208daniel.rosen@livent.com
Media:Juan Carlos Cruz +1 215 299
6725juan.carlos.cruz@livent.com
TeneoAndrea Calise +1 917 826
3804andrea.calise@teneo.com
Spencer Smith +1 646 531 8079spencer.smith@teneo.com
Allkem Contacts
Investors: Andrew Barber +61 418 783
701andrew.barber@allkem.co
Community Affairs:Karen Vizental +54 9 114 414
4702karen.vizental@allkem.co
Media:GRACoswayBen Wilson +61
407 966 083bwilson@gracosway.com.au
Max Hewett +61 432 332 215mhewett@gracosway.com.au
About Livent
For nearly eight decades, Livent has partnered with its
customers to safely and sustainably use lithium to power the world.
Livent is one of only a small number of companies with the
capability, reputation, and know-how to produce high-quality
finished lithium compounds that are helping meet the growing demand
for lithium. The Company has one of the broadest product portfolios
in the industry, powering demand for green energy, modern mobility,
the mobile economy, and specialized innovations, including light
alloys and lubricants. Livent has a combined workforce of
approximately 1,350 full-time, part-time, temporary, and contract
employees and operates manufacturing sites in the United States,
England, China, and Argentina. For more information, visit
livent.com
About Allkem
Allkem is a specialty lithium chemicals company with a global
portfolio of diverse and high-quality lithium chemicals.
Headquartered in Buenos Aires, Argentina, the company’s unique
portfolio includes lithium brine operations in Argentina, a hard
rock lithium operation in Australia, a hard rock development
project in Québec, and a lithium hydroxide conversion facility in
Japan. Development is underway across the globe to increase
international scale and product flexibility to meet significant
projected demand growth that is underpinned by a global transition
to a net zero carbon future. Allkem’s pillars of success are built
on safety, sustainability, cost leadership, and product quality,
through relations with our people, partners, customers, and
communities. For more information, visit allkem.co.
Important Information and Legal Disclaimer:
Important Notices
This announcement is a joint announcement by Allkem Limited ACN
112 589 910 (Allkem) (authorised for release by
Mr. Martín Pérez de Solay, CEO and Managing Director of Allkem) and
Livent Corporation (Livent).
This announcement has been prepared in relation to the proposed
combination of Allkem and Livent under a newly created holding
company, incorporated in the Bailiwick of Jersey
(NewCo), effected through (1) the acquisition of
shares of Allkem by NewCo by way of scheme of arrangement under
Part 5.1 of the Corporations Act 2001 (Cth) (the
Scheme); and (2) the merger of Livent and a newly
incorporated entity that will be a wholly-owned subsidiary of NewCo
(“US Merger Sub”) (the “Merger”, and the Scheme and the Merger
together, the “Transaction”). Under the Scheme, NewCo would acquire
100% of the fully paid ordinary shares in Allkem in exchange for
the issue to Allkem shareholders of new fully paid ordinary shares
in NewCo or CHESS Depositary Interests in respect of fully paid
ordinary shares in NewCo. Under the Merger, Livent would merge into
US Merger Sub with Livent shares being converted into the right to
receive new fully paid ordinary shares in NewCo.
The Transaction is subject to the terms and conditions described
in the Transaction Agreement entered into among Allkem, Livent, and
NewCo on or about the date of this announcement (the “Transaction
Agreement”). A copy of the Transaction Agreement is attached to
this announcement and is available on the Australian Securities
Exchange (“ASX”)’s website (at www.asx.com.au), on the website
maintained by the U.S. Securities and Exchange Commission (the
“SEC”) (at www.sec.gov), and on the System for Electronic Document
Analysis and Retrieval (SEDAR) website of the Canadian Securities
Administrators (at www.sedar.com).
Allkem and Livent have jointly prepared this announcement based
on information available to them as at the date of this
announcement. No representation or warranty, express or implied, is
made as to the fairness, accuracy, completeness or correctness of
the information, opinions and conclusions contained in this
announcement. To the maximum extent permitted by law, none of
Allkem or Livent, their respective directors, employees, agents or
advisers, or any other person, accepts any liability, including,
without limitation, any liability arising from fault or negligence
on the part of any of them or any other person, for any loss
arising from the use of this announcement or its contents or
otherwise arising in connection with it.
Summary information only; not an offer
This announcement and the information contained in it is
provided for information purposes only and is not intended to be
and shall not constitute a solicitation of any vote or approval, or
an offer to sell or solicitation of an offer to buy, or an
invitation or recommendation to subscribe for, acquire or buy
securities of Allkem, Livent or NewCo, or any other financial
products or securities, in any place or jurisdiction, nor shall
there be any offer, solicitation or sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made in the United States absent registration under the
U.S. Securities Act of 1933, as amended (the Securities Act), or
pursuant to an exemption from, or in a transaction not subject to,
such registration requirements.
The announcement contains summary information only, and further
detailed information about Allkem, Livent, NewCo and the
Transaction will be provided in the explanatory statement and
notice of meeting to be dispatched to Allkem shareholders in
relation to the Scheme and in the proxy statement/prospectus and
other relevant materials to be dispatched to Livent stockholders
and filed with the SEC in relation to the Merger.
Limitation on information in relation to Livent and its
operations
All information in this announcement in relation to Livent and
its operations – including in relation to or otherwise derived from
historical production, historical costs and cash flows and other
financial information, or production or development plans, or
infrastructure or production capacity or capability, or any
forward-looking statements relating to or extrapolated from any of
that information – has been sourced from Livent.
Allkem has conducted due diligence in relation to the
Transaction, but has not been, and is not, in a position to
independently verify such information and, to the maximum extent
permitted by law, makes no representation or warranty, express or
implied, as to the fairness, accuracy, completeness or adequacy of
any information relating to Livent or its operations.
Limitation on information in relation to Allkem and its
operations
All information in this announcement in relation to Allkem and
its operations – including in relation to or otherwise derived from
historical production, historical costs and cash flows and other
financial information, production or development plans, or
infrastructure or production capacity or capability, or any
forward-looking statements relating to or extrapolated from any of
that information – has been sourced from Allkem.
Livent has conducted due diligence in relation to the
Transaction, but has not been, and is not, in a position to
independently verify such information and, to the maximum extent
permitted by law, makes no representation or warranty, express or
implied, as to the fairness, accuracy, completeness or adequacy of
any information relating to Allkem or its operations.
Financial data
All references to "$" or "US$" or "USD" are to American dollars,
being the lawful currency of the United States of America. All
references to “A$” or "AUD" are to Australian dollars, being the
lawful currency of Australia, unless stated otherwise. Any
references to “¥” or “RMB" are to Chinese yuan, being the lawful
currency of China, unless stated otherwise.
Any combined financial information included in this announcement
is for illustrative purposes only and does not purport to be in
compliance with Article 11 of Regulation S-X of the rules and
regulations of the SEC. Rather, such information is a simple
summation of Livent’s financial results under US GAAP and Allkem’s
financial results under IFRS; such results may not be comparable
and pro forma information under Article 11 may be materially
different. Investors should be aware that financial
data in this announcement includes "non-IFRS financial information"
under ASIC Regulatory Guide 230 "Disclosing non-IFRS financial
information" published by ASIC and also “non-GAAP financial
measures” within the meaning of Regulation G under the U.S.
Securities Exchange Act of 1934, as amended. Allkem and Livent
believe the non-IFRS financial information and non-GAAP financial
measures provide useful information to users in measuring the
financial performance and conditions of Allkem, Livent and NewCo
post-closing of the Transaction (together, the “Merged Group”). The
non-IFRS and non-GAAP financial information does not have a
standardised meaning prescribed by Australian Accounting Standards
or US GAAP, respectively, and, therefore, may not be comparable to
similarly titled measures presented by other entities, nor should
they be construed as an alternative to other financial measures
determined in accordance with Australian Accounting Standards or US
GAAP. Investors are cautioned, therefore, not to place undue
reliance on any non-IFRS financial information and ratios or
non-GAAP financial measures included in this announcement.
Livent evaluates operating performance using certain non-GAAP
measures such as EBITDA, which is defined as net income plus
interest expense, net, income tax expense and depreciation and
amortization; and Adjusted EBITDA, which is defined as EBITDA
adjusted for restructuring and other charges, separation-related
costs, COVID-19 related costs and other losses/(gains). Livent’s
management believes the use of these non-GAAP measures allows
management and investors to compare more easily the financial
performance of its underlying business from period to period. The
non-GAAP information provided may not be comparable to similar
measures disclosed by other companies because of differing methods
used by other companies in calculating EBITDA and Adjusted EBITDA.
These measures should not be considered as a substitute for net
income or other measures of performance or liquidity reported in
accordance with US GAAP. A reconciliation of EBITDA and Adjusted
EBITDA to net income is included in this announcement.
Reconciliations of Livent’s forward-looking non-GAAP measures to
the most directly comparable measures prepared in accordance with
GAAP are not being provided because Livent is unable to provide
these reconciliations without unreasonable effort due to the
uncertainty and inherent difficulty of predicting the occurrence,
financial impact, and the periods in which the relevant adjustments
would be recognized.
Non-IFRS information, including underlying earnings, has not
been audited but have been extracted from Allkem’s periodic
financial statements.
Forward-Looking Statements
This announcement contains forward-looking statements, including
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements can often be identified by
terms such as “may,” “will,” “appears,” “should,” “expects,”
“plans,” “anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential,”
or “continue,” or the negative of these words or other similar
terms or expressions that concern expectations, strategy, plans, or
intentions. However, the absence of these words or similar terms
does not mean that a statement is not forward-looking. All
forward-looking statements are based on information and estimates
available to Allkem or Livent at the time of this announcement and
are not guarantees of future performance.
Examples of forward-looking statements in this announcement
(made at the date of this announcement unless otherwise indicated)
include, among others, statements regarding the future performance
of the Merged Group, the perceived and potential synergies and
other benefits of the Transaction, and expectations around the
financial impact of the Transaction on the Merged Group’s
financials. In addition, this announcement contains statements
concerning the intentions, beliefs and expectations, plans,
strategies and objectives of the directors and management of Allkem
and Livent for Allkem, Livent and the Merged Group, the anticipated
timing for and outcome and effects of the Transaction (including
expected benefits to shareholders of Allkem and Livent),
anticipated production, production capacity or construction or
development commencement dates, costs or production outputs,
capital expenditure and future demand for lithium, expectations for
the ongoing development and growth potential of the Merged Group
and the future operation of Allkem, Livent and the Merged
Group.
Forward-looking statements are not statements of historical fact
and actual events and results may differ materially from those
contemplated by the forward-looking statements as a result of a
variety of known and unknown risks, uncertainties, and other
factors (many of which are outside the control of Allkem, Livent
and the Merged Group), some of which are described from time to
time in Livent’s filings with the SEC and Allkem’s filings with the
ASX, including Livent’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2022, and any subsequent Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K and Allkem’s Annual
Report for the financial year ended 30 June 2022 (Appendix 4E),
Half-Year Report for the half year ended 31 December 2022 (Appendix
4D), and March Activities Report for the quarter ended 31 March
2023, and future filings and reports by either Allkem or
Livent.
These statements involve known and unknown risks, uncertainties
and other factors that may cause actual results to be materially
different from any results, levels of activity, performance or
achievements expressed or implied by any forward-looking statement
and may include statements regarding the expected timing and
structure of the proposed transaction; the ability of the parties
to complete the proposed transaction considering the various
closing conditions; the expected benefits of the proposed
transaction, such as improved operations, enhanced revenues and
cash flow, synergies, growth potential, market profile, business
plans, expanded portfolio and financial strength; the competitive
ability and position of NewCo following completion of the proposed
transaction; and anticipated growth strategies and anticipated
trends in Livent’s, Anaconda’s and, following the completion of the
proposed transaction, NewCo’s business.
In addition, other factors related to the Transaction between
Allkem and Livent that contribute to the uncertain nature of the
forward-looking statements and that could cause actual results and
financial condition to differ materially from those expressed or
implied include, but are not limited to: the satisfaction of the
conditions precedent to the consummation of the Transaction,
including, without limitation, the receipt of shareholder and
regulatory approvals on the terms desired or anticipated;
unanticipated difficulties or expenditures relating to the
Transaction, including, without limitation, difficulties that
result in the failure to realize expected synergies, efficiencies
and cost savings from the Transaction within the expected time
period (if at all); potential difficulties in Allkem's and Livent's
ability to retain employees as a result of the announcement and
pendency of the Transaction; risks relating to the value of NewCo's
shares to be issued in the Transaction; disruptions of Allkem’s and
Livent's current plans, operations and relationships with customers
caused by the announcement and pendency of the Transaction; legal
proceedings that may be instituted against Allkem and Livent
following announcement of the Transaction; funding requirements;
lithium and other commodity prices; exploration, development and
operating risks (including unexpected capital or operating costs);
production risks; regulatory restrictions (including environmental
regulations and associated liability, changes in regulatory
restrictions or regulatory policy and potential title disputes) and
risks associated with general economic conditions.
Additional factors that could cause actual results, level of
activity, performance or achievements to differ materially from the
results, level of activity, performance or achievements expressed
or implied by the forward-looking statements are detailed in the
filings with the SEC, including Livent’s annual report on Form
10-K, periodic quarterly reports on Form 10-Q, periodic current
reports on Form 8-K and other documents filed with the SEC.
There can be no assurance that the Transaction will be
implemented or that plans of the directors and management of Allkem
and Livent for the Merged Group will proceed as currently expected
or will ultimately be successful. Investors are strongly cautioned
not to place undue reliance on forward-looking statements,
including in respect of the financial or operating outlook for
Allkem, Livent or the Merged Group (including the realisation of
any expected synergies).
Except as required by applicable law or the ASX Listing Rules,
Allkem and Livent assume no obligation to, and expressly disclaim
any duty to, provide any additional or updated information or to
update any forward-looking statements, whether as a result of new
information, future events or results, or otherwise. Nothing in
this announcement will, under any circumstances (including by
reason of this announcement remaining available and not being
superseded or replaced by any other presentation or publication
with respect to Allkem, Livent or the Merged Group, or the subject
matter of this announcement), create an implication that there has
been no change in the affairs of Allkem or Livent since the date of
this announcement. The distribution of this announcement may be
subject to legal or regulatory restrictions in certain
jurisdictions. Any person who comes into possession of this
announcement must inform himself or herself of and comply with any
such restrictions.
Allkem / Nemaska Minerals and Production
Capacity
Allkem has reported mineral resources under Australian
standards, but neither Allkem nor Nemaska Lithium Inc. has reported
any mineral resources in a manner compliant with SEC Regulation S-K
Rule 1300. We expect that such entities will report S-K
1300-compliant resources in the registration statement for this
transaction, but we can provide no assurances as to the level of
such resources at this time. Accordingly, any production capacity
and targets disclosed for future years represent estimates of
capacity but there can be no assurances that the combined company
will be able to achieve such production capacity. Livent is not
treating such information as an estimate of Allkem or Nemaska
mineral resources or reserves.
Production Targets
This announcement includes production targets of the Merged
Group (or other forward-looking statements of that nature) (see
pages 1 and 3 in particular, referred to as the “Key Production
Target” in this Disclaimer). The information in this announcement
that relates to the Key Production Target is derived from the ASX
release entitled “Allkem and Livent to Create a Leading Global
Integrated Lithium Chemicals Producer” dated May 10, 2023, which is
available to view on https://www.allkem.co, www.asx.com.au,
www.sedar.com (“Investor Presentation”). Allkem confirms that
all material assumptions underpinning the Key Production Target in
the Investor Presentation and required by ASX Listing Rule 5.16
continue to apply and have not materially changed.
Note on synergies
Please also refer to the individual Investor Presentations of
Allkem and Livent released to ASX, furnished to the SEC and
otherwise published, as applicable, simultaneously with this
announcement for further information about the basis and
assumptions underlying any statements about synergies that could be
expected to be delivered and achieved by the Merged Group as a
result of the Transaction.
No offer or solicitation
This communication is for informational purposes only and is not
intended to be and shall not constitute a solicitation of any vote
or approval, or an offer to buy or sell, or the solicitation of an
offer to buy or sell, any securities, or an invitation or
recommendation to subscribe for, acquire or buy securities of
Allkem, Livent or NewCo, or any other financial products or
securities, in any place or jurisdiction, nor shall there be any
offer, solicitation or sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made in the United
States absent registration under the U.S. Securities Act of 1933,
as amended (the “Securities Act”), or pursuant to an exemption
from, or in a transaction not subject to, such registration
requirements.
Additional information and where to find it
NewCo and Livent plan to file relevant materials with the SEC in
connection with the Transaction, including a registration statement
on Form S-4 that will contain a proxy statement/prospectus and
other documents. NewCo and Livent will prepare and file the proxy
statement/prospectus with the SEC, Livent will mail the proxy
statement/prospectus to its stockholders and Livent and Allkem will
file other documents regarding the proposed transaction with the
SEC. This communication is not a substitute for any registration
statement, proxy statement/prospectus or other documents that may
be filed with the SEC in connection with the proposed
transaction.
INVESTORS SHOULD READ THE PROXY STATEMENT/PROSPECTUS AND SUCH
OTHER DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY AND IN
THEIR ENTIRETY, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THE
PROXY STATEMENT/PROSPECTUS AND SUCH DOCUMENTS, BEFORE THEY MAKE ANY
DECISION WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT NEWCO, LIVENT, ALLKEM, THE
TRANSACTION AND RELATED MATTERS. The Form S-4, the proxy
statement/prospectus, any amendments or supplements thereto and all
other documents filed with the SEC in connection with the
Transaction will be available when filed free of charge on the
SEC’s web site at www.sec.gov. Copies of documents filed with the
SEC by Livent will be made available free of charge on Livent's
investor relations website (at
https://ir.livent.com/overview/default.aspx).
This presentation should be read in conjunction with Allkem’s
other periodic and continuous public disclosures. Allkem’s
announcements are lodged with ASX and are available on ASX’s
website (at www.asx.com.au) and Allkem’s website (at
www.allkem.co).
Further information about the Transaction (including key risks
for Allkem shareholders) will be provided by Allkem to Allkem
shareholders and released to ASX in due course, in the form of an
explanatory statement (as that term is defined in section 412 of
the Corporations Act) and notice of meeting (the “Scheme Booklet”).
The Scheme Booklet will also include or be accompanied by an
independent expert's report that will opine on whether the Scheme
is in the best interest of Allkem shareholders.
Further information about the Transaction (including key risks
for Livent stockholders) will be provided by Livent to Livent
stockholders and filed with the SEC in due course, in the form of a
proxy statement/prospectus.
Participants in the Solicitation
Livent, Allkem, NewCo and certain of their respective directors
and executive officers and other members of their respective
management and employees may be deemed to be participants in the
solicitation of proxies in connection with the Transaction.
Information regarding the persons who may, under the rules of the
Securities and Exchange Commission (“SEC”), be deemed participants
in the solicitation of proxies in connection with the Transaction,
including a description of their direct or indirect interests in
the Transaction, by security holdings or otherwise, will be set
forth in the proxy statement/prospectus and other relevant
materials when it is filed with the SEC. Information regarding the
directors and executive officers of Livent is contained in Livent’s
proxy statement for its 2023 annual meeting of stockholders, filed
with the SEC on March 16, 2023, its Annual Report on Form 10-K for
the fiscal year ended December 31, 2022, which was filed with the
SEC on February 24, 2023, subsequent statements of beneficial
ownership on file with the SEC and other filings made from time to
time with the SEC. Information about Allkem’s directors and
executive officers is set forth in Allkem’s latest annual report
dated 25 August 2022, as updated from time to time via
announcements made by Allkem on the Australian Securities Exchange.
Additional information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation of
Livent security holders in connection with the Transaction,
including a description of their direct or indirect interests, by
security holdings or otherwise, will be set forth in the proxy
statement/prospectus and other relevant materials when they are
filed with the SEC. These documents can be obtained free of charge
from the sources indicated above.
Adjusted EBITDA Reconciliation
CY2022 EBITDA Reconciliation ($MM) |
Livent |
Allkem |
CY2022 Net Income |
273.5 |
543.9 |
Add back: |
|
|
Income tax expense |
61.9 |
219.7 |
Interest expense, net |
-- |
(7.8) |
Depreciation and amortization |
27.7 |
63.6 |
CY2022 EBITDA |
363.1 |
819.5 |
Add back: |
|
|
Argentina remeasurement losses |
6.7 |
-- |
Restructuring and other charges |
7.5 |
-- |
Separation-related costs |
0.7 |
-- |
COVID-19 related costs |
2.4 |
-- |
Loss on debt extinguishment |
0.1 |
-- |
Other loss |
9.9 |
-- |
Foreign currency loss / (gain) |
-- |
36.8 |
Share of loss of associate, net of tax |
-- |
6.1 |
Impairment / write-downs |
-- |
0.2 |
Subtract: |
|
|
Blue Chip Swap gain |
(22.2) |
-- |
Argentina interest income |
(1.5) |
-- |
Gains from financial instruments |
-- |
(47.2) |
CY2022 Adjusted EBITDA |
366.7 |
815.5 |
CY2022 Combined Adjusted EBITDA |
|
1,182.2i |
_________________________________
i Combined CY2022A financials prepared on different accounting
basis for Allkem and Livent. Combined metrics reflect the simple
summation of the reported financial metric for Allkem and Livent
and are not adjusted to be on the same accounting basis and do not
reflect any Article 11 pro forma adjustments. Pro forma results
could differ materially. Allkem metrics exclude divested Borax
assets (divestiture was completed in December 2022). For combined
adjusted EBITDA, metric is the sum of Livent’s adjusted EBITDA and
Allkem’s reported EBITDAIX. EBITDAIX is defined as segment earnings
before interest, taxes, depreciation, amortization, impairment,
gains from financial instruments, foreign currency (losses)/gains,
business combination acquisition costs, non-cash business
combination adjustments, and share of associate losses. Please see
the Financial Data section from the Important Information and Legal
Disclaimer for further information.
_________________________________
1 Based on the combined market capitalization of Allkem and
Livent and a USD:AUD foreign exchange rate of 0.676. The market
capitalization of Livent (US$5.1 billion) has been calculated by
reference to the closing price of Livent shares on NYSE on May 9,
2023, of US$24.23 per Livent share and 209.5 million Livent fully
diluted shares on issue. The market capitalization of Allkem has
been calculated by reference to the closing price of Allkem shares
on ASX on May 9, 2023, of A$12.83 per Allkem share and 641.5
million Allkem fully diluted shares on issue.2 Allkem’s results are
based on its IFRS results for the LTM ended December 31, 2022 and
are unaudited. The combined financial information is a simple
summation of Livent’s and Allkem’s results for Livent’s fiscal year
ended December 31, 2022 and Allkem’s twelve months ended December
31, 2022, and is not presented in accordance with Article 11 of
Regulation S-X. Pro forma information prepared according to Article
11 of Regulation S-X may be substantially different from the
combined information included in this announcement. 3 Refer to
pages 23 to 28 of the Investor Presentation dated May 10th, 2023,
which is available to view on www.allkem.co and www.asx.com.au,
(Investor Presentation) for information underpinning the production
targets, production capacities (and other forward-looking
statements of that nature) for NewCo. Allkem confirms that all
material assumptions underpinning the production targets,
production capacities (and other forward-looking statements of that
nature) of NewCo in the Investor Presentation continue to apply and
have not materially changed. Refer to page 11 of the Important
Information and Legal Disclaimer for further information in
relation to the production targets of NewCo. 4 All ownership ratios
in this release based on fully diluted share counts5 Refer to pages
23 to 28 of the Investor Presentation for information underpinning
the production targets, production capacities (and other
forward-looking statements of that nature) for NewCo. Allkem
confirms that all material assumptions underpinning the production
targets, production capacities (and other forward-looking
statements of that nature) of NewCo in the Investor Presentation
continue to apply and have not materially changed. Refer to page 11
of the Important Information and Legal Disclaimer for further
information in relation to the production targets of NewCo.6 This
implies a premium of approximately 14% to Allkem shareholders
measured using volume weighted average share prices over one-month
from April 10, 2023 to May 9, 2023. The premium is calculated
assuming Allkem shareholders contribute their shares to the merged
entity at an implied price of A$13.54 per share, calculated using
the Livent one month volume average weighted price over the same
period of US$21.81, the agreed exchange ratio of 2.406 NewCo shares
per Livent share, and the daily USD:AUD foreign exchange rates over
the period.7 Merged group pro forma liquidity position based on:
(i) Allkem’s available cash position as of March 31, 2023, as set
out in Allkem’s March 2023 Quarterly Report, dated April 20, 2023
which was prepared in accordance with the requirements of the
Corporations Act 2001 (Cth), Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board
(AASB) and International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board (IASB)
(together, “Australian Standards”); and (ii) Livent’s cash &
equivalents and available funds under revolving credit facilities
position as of March 31, 2023, as set out in Livent’s Form 10-Q
dated May 4, 2023 which was prepared in accordance with US GAAP
(together, “US Standards”). As the merged group pro forma cash
position has not been prepared in accordance with a consistent set
of recognised accounting standards (either in accordance with the
Australian Standards or the US Standards), this information is
provided for illustrative purposes only and shareholders are
accordingly cautioned not to place undue reliance on this
information.
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