ASX-listed lithium mining company Galaxy Resources and Brisbane-based mineral resource company Orocobre Limited have agreed to a proposed A$4 billion merger of equals, establishing a new force in the global lithium sector.
The merger creates the 5th largest global lithium chemicals company with a diversified production base and significant portfolio of upstream and downstream growth projects.
Under the agreement, Galaxy Chairman Martin Rowley will become Non-Executive Chairman, Orocobre Chairman Robert Hubbard will become Deputy Chairman, Martín Pérez de Solay will remain CEO of the group and Simon Hay will become President of International Business reporting to the CEO.
According to Orocobre’s statement, the CEO together with the Board will commence an integration process to determine the optimal management team drawing from employees from both companies based on a best-fit basis.
On implementation of the scheme, the Board of Directors will comprise four Independent Directors from Orocobre (including Mr Hubbard), four Independent Directors from Galaxy (including Mr Rowley), and the CEO Mr Pérez de Solay.
As part of the agreement, both Mr Rowley and Mr Hubbard will retire from their roles within 12 months of implementation. They will lead a process to ensure that the longer-term Board composition is ideally placed to lead the merged entity going forward.
Orocobre Chairman Robert Hubbard described the logic of this merger as ‘compelling’.
“Both Orocobre and Galaxy shareholders, will benefit from the diversification, growth and scale of a top 5 global lithium chemicals company,” he continued.
“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.”
Galaxy CEO Simon Hay added: “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.”