Australian lithium miners Galaxy Resources and Orocobre have announced to merge in a A$4 billion ($3.1 billion) deal that would create the world’s fifth largest producer of lithium chemicals, the refined form of the raw material used to make electric vehicle (EV) batteries.
“The logic of this merger is compelling,” Orocobre chairman, Robert Hubbard, who becomes deputy chairman of the yet to be formally named new company, said in the media statement.
Orocobre produces lithium carbonate at its Olaroz operation in Argentina, while Galaxy has a mine in Australia and growth projects in Canada and South America.
The deal values Galaxy at about A$3.53 a share, a 2.2% discount to Friday’s close, and has the backing of both company boards.
Orocobre will offer 0.569 of its shares for every Galaxy share and will own 54.2% of the merged company, with Galaxy holding 45.8%. Orocobre was advised on the deal by UBS, while Galaxy’s adviser was Standard Chartered.
“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,” Martín Pérez de Solay, current chief executive officer and managing director of Orocobre, said.
“From Galaxy’s perspective, we were looking for a partner which had deep in-country Argentinian experience and we’ve got that in Orocobre,” said Simon Hay, Galaxy’s CEO, who will take on the role of president of international business at the new company.