Perth-based lithium miner Galaxy Resources has struck a merger deal with Orocobre, with the combined group to focus on projects in Argentina.
Perth-based lithium miner Galaxy Resources has struck a merger deal with Orocobre, with the combined group to focus on projects in Argentina.
The market welcomed the news, with the share price of both companies lifting about 6 per cent today.
That has lifted Brisbane-based Orocobre’s market capitalisation to $2.13 billion while Galaxy is valued at $1.82 billion.
The combined group will be the fifth largest global lithium producer, behind China’s Ganfeng, US company Albemarle, Chile’s SQM and China’s Tianqi Lithium.
It would rank just ahead of Perth-based lithium miner Pilbara Minerals, which has a market value of $3.77 billion.
Under a proposed scheme of arrangement, each Galaxy shareholder will receive 0.569 Orocobre shares for every Galaxy share they hold.
Orocobre shareholders will own 54.2 per cent of the combined group.
The scheme has been unanimously recommended by Galaxy’s directors.
Galaxy chairman Martin Rowley will chair the merged group, with Orocbore chairman Robert Hubbard to be his deputy.
However, both have agreed to retire within 12 months.
The merged entity will have its head office in Buenos Aires, with a corporate headquarters on Australia’s east coast and an office in Perth.
In keeping with the South American focus, Orocobre chief executive Martin Perez de Solay will retain that role with the merged group.
Galaxy's Perth-based chief executive, Simon Hay, will become president of international business.
The companies said the merged entity would have complementary, large-scale tier-one assets, including Galaxy’s Sal de Vida project and Orocobre’s Olaroz mine, both in northern Argentina.
Galaxy also operates the Mt Cattlin lithium mine near Ravensthorpe and has the James Bay project in Canada.
The companies said other benefits of the merger included sharing of technical expertise, operational cost savings in Argentina, marketing synergies and enhanced ASX liquidity.
Galaxy was advised by Standard Chartered Bank and Ashurst, while Orocobre was advised by UBS and Jones Day.
