We’re voting against Allkem’s $16b merger with Livent, Ausbil says
Could a third much-touted mega transaction be heading for the dust bin by the end of the year? Already, AustralianSuper has derailed Brookfield and EIG’s $20 billion bid for Origin Energy, and Gina Rinehart has kiboshed Albemarle’s $6.6 billion offer to buy out Liontown Resources. Allkem’s proposed $16 billion merger with Livent may be going the same way.
Street Talk understands Ausbil has been telling its investors that it intends to vote against the deal. The fund manager owns some 3.3 per cent of Allkem, and believes that the company’s growth plans would be better supported if the Argentina-focused lithium operator once known as Orocobre remains listed on the ASX.
Livent chief executive Paul Graves and Allkem boss Martin Perez de Solay last month. Edwina Pickles
Ausbil, which has some $15 billion in assets under management, has also made it clear that it believes the proposed merger ratio doesn’t properly reflect the nature and the size of Allkem’s business relative to Livent’s.
There are plenty of other fund managers who hold a similar view. Luckily for Allkem and Livent, there’s no gorilla sitting on the register – as AustralianSuper, which ended up with more than 17 per cent of Origin. There are a number of industry superannuation funds among Allkem’s investors, however, including Australian Retirement Trust and HESTA.
Allkem managing director Martín Pérez de Solay and his Livent counterpart, Paul Graves, are acutely aware of investor disquiet. They were in Australia last month to meet with investors ahead of a vote next week.
Some local fund managers are also unhappy that Allkem will account for only 56 per cent of the combined entity – to be known as Arcadium Lithium – and that the merged group’s primary listing will be in New York. L1 Capital’s Raphael Lamm told The Australian Financial Review in November that the deal was looking “increasingly unattractive”.
Or, as Jefferies analysts told their clients that month: “Livent needs Allkem far more than Allkem needs it.” The independent expert’s report, on the other hand, found that the merger ratio was fair.
The merged entity will have the capacity to produce and process a range of lithium materials across assets in Argentina, Canada, the United States, Australia, Japan, China and the United Kingdom.
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