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- Orocobre (ORE) and Galaxy Resources (GXY) are gearing up to merge, creating the largest ASX-listed lithium company and fifth-largest global lithium chemicals company
- The boards of both companies have indicated their support for the scheme, through which Orocobre will buy all Galaxy shares
- This would result in Orocobre shareholders owning 54.2 per cent of the merged company and Galaxy shareholders owning the remaining interest
- If all goes to plan, the scheme will be implemented in mid-August, prompting a name change and the creation of a new board
- Orocobre CEO and Managing Director Martín Pérez de Solay will remain at the helm of the merged entity
- GXY has dropped 0.1 per cent to $3.61, and ORE has gained 4.2 per cent to trade at $6.46
Orocobre (ORE) and Galaxy Resources (GXY) are gearing up to merge, creating the largest ASX-listed lithium company and fifth-largest global lithium chemicals company.
The boards of both companies have indicated their support for the scheme, though which Orocobre will buy all Galaxy shares. Shareholders will be offered 0.569 ORE shares per GXY share.
This would result in Orocobre shareholders owning 54.2 per cent of the merged company and Galaxy shareholders owning the remaining 45.8 per cent interest.
The newly merged company, which is yet to be named, would be one of the largest 200 companies listed on the ASX with a market capitalisation of $4 billion.
It would also have an enhanced financial capacity with pro forma gross cash of US$487 million (around A$630 million), enabling to progress multiple projects in parallel. Combined, the companies have early-stage to producing assets in Australia, Canada, Argentina and Japan.
Galaxy Chairman Martin Rowley will transition to Non-Executive Chairman of the new lithium player and spoke on the synergies of the vertically integrated business.
“The merged entity’s growth opportunities in both brine and hard rock position it uniquely to take advantage of expected rising electric vehicle demand for lithium.”
The new board would comprise four independent directors from each company, including Martin Rowley as Non-Executive Chairman and current Orocobre Chairman Robert Hubbard as Deputy Chairman.
Orocobre CEO and Managing Director Martín Pérez de Solay will continue in the roles and lead the merged entity.
“The merger brings together assets and teams with highly complementary skills and knowledge, with a unique opportunity to create a leading independent lithium company.”
“The merger consolidates the combined group’s position in Argentina and will give us significant operational, technical and financial flexibility to deliver the full value of our combined portfolio,” he added.
The proposed merger is still subject to several conditions, including Galaxy shareholder and court approvals, as we as an independent expert concluding the scheme is in the best interest of Galaxy shareholders.
If all goes to according to schedule, the scheme will be implemented in mid-August.
GXY has dropped 0.1 per cent to $3.61, and ORE has gained 4.2 per cent to trade at $6.46 at 10:20 am AEST.
