Lithium companies Livent and Allkem are moving ahead with a merger that would position the combined company to be the world’s third-largest producer in the market.
Livent, based in Philadelphia, and Allkem filed regulatory documents last week with the U.S. Security and Exchange Commission. Both companies seek to close the transaction before the end of the year.
Allkem said the merger awaits approvals from certain regulators and Australian courts, and the vote of shareholders of both companies.
The companies, which announced their tie-up in May, are trying to improve their position in an industry central to the manufacture of batteries for electric vehicles. Livent and Allkem, however, are far from the production volumes of the major companies in the industry. The news came in a week that ended with lithium mining companies’ shares rising on the expectation that the price of the mineral has bottomed out after almost a year of slump and is starting a rebound, according to industry analysts.
The new company is expected to have a $10.6 billion market cap, will be listed on the New York Stock Exchange, and headquartered in the U.S. The chief executive will be Paul Graves, who currently holds the same position at Livent. Allkem shareholders will own 56% of the shares and Livent shareholders the remaining 44%.
The companies forecast a combined production capacity by 2027 that would make them the world’s third-largest lithium producer. However, there is skepticism about this claim on the market.
“If they are able to meet their capacity expansion timelines that they currently layout, then that is possible,” said Seth Goldstein, equities strategist for Morningstar Research Services. “But I am still not sure if they are going to be able to pass Gangfeng, and I do not see them getting close to Albemarle or SQM.”
For Goldstein, meeting timelines is one of the difficulties that both companies have faced in recent years and that may be improved with the merger.
“They could help each other with each other’s cross expertise to ensure that they can meet their projects and ramp up on new capacity quicker,” Goldstein said.
The merger will allow the companies to diversify geographically and combine their expertise. Livent only extracts lithium from salt flats in Argentina but has refining facilities in the U.S., U.K., and China. Allkem is a more mining-focused company, with operations in both hard rock and salt flats in Australia, Argentina, and Canada. This expertise is valued by Livent, which last year bought Nemaska Lithium, a company that is developing a hard rock mine in Canada.
However, combining two companies with such different styles can also be challenging, some analysts said.