Orocobre and Galaxy agree to a proposed A$4B merger of equals, establishing a new force in the global lithium sector. Merger creates the 5th largest global lithium chemicals company with a diversified production base and exciting growth platform, with potential to unlock significant synergies and realise value to be shared by all shareholders.
Orocobre Limited (ASX:ORE, TSX:ORL) (Orocobre) and Galaxy Resources Limited (ASX:GXY) (Galaxy) announced that they have entered into a binding Merger Implementation Deed (MID) under which the two companies will merge via a Galaxy Scheme of Arrangement (Scheme) pursuant to which Orocobre will acquire 100% of the shares in Galaxy.
Galaxy shareholders will receive 0.569 Orocobre shares for each Galaxy share held at the Scheme record date. Upon implementation of the Scheme, Orocobre shareholders will own 54.2% of the fully diluted share capital of the combined entity and Galaxy shareholders will own the remaining 45.8%.
The Scheme is unanimously recommended by the Board of Galaxy and each Galaxy Director intends to vote all the shares that they hold in Galaxy in favour of the Scheme (in both cases, subject to no superior proposal emerging and the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Galaxy shareholders).
The Scheme is endorsed and supported by the Board of Orocobre, subject to no proposal for Orocobre emerging.
As part of the proposed Scheme, Martin Rowley would become Non-Executive Chairman, Robert Hubbard would become Deputy Chairman, and Martín Pérez de Solay would remain CEO and Managing Director of the group, with a highly experienced and complementary Board and management team drawn from the combined group.
A new name for the merged entity will be selected in due course representing the global reach of the new entity, which will have its head office in Buenos Aires, Argentina, a corporate headquarters on the Australian East Coast and an office in Perth.
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Highlights Summary
- Creating a Top 5 global lithium chemicals company1
- Highly complementary portfolio of assets delivering geographical and product diversification across brine, hard rock and vertical integration across the supply chain
- Industry leading growth profile with enhanced financial position to optimise and potentially accelerate development with the ability and intent to capture further downstream value
- Compelling industrial logic with significant value creation opportunities unique to this merger
- Highly experienced and complementary Board and senior management teams to drive growth
- Potential to generate significant shareholder value with enhanced scale and financial capacity
Galaxy Chairman Martin Rowley commented:
This transaction has the potential to be a significant value-creating opportunity for Galaxy and Orocobre shareholders.
“The Scheme provides shareholders of Galaxy with the opportunity to share in the significant benefits of being part of a larger diversified group and the synergies expected to be available to help enhance and progress our portfolio of world class assets. The merged entity’s growth opportunities in both brine and hard rock position it uniquely to take advantage of expected rising EV demand for lithium.”
Orocobre Chairman Robert Hubbard commented:
The logic of this merger is compelling. Both Orocobre and Galaxy shareholders, will benefit from the diversification, growth and scale of a top 5 global lithium chemicals company.
“I take this opportunity to re-iterate the group’s ongoing commitment to the principles of delivering the highest level of transparency of our environmental, social and governance performance, the foundations upon which our assets have and will continue to be developed.”
Orocobre CEO and Managing Director Martín Pérez de Solay commented:
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.”
Galaxy CEO Simon Hay commented:
The merger with Orocobre represents an exciting opportunity for both Orocobre and Galaxy shareholders to consolidate and realise the full potential of our asset portfolios and technical capabilities.
“The transaction will allow the group to materially accelerate the development of our combined growth projects.”
Orocobre and Galaxy agree to a proposed A$4B merger of equals, establishing a new force in the global lithium sector, April 19, 2021
