Orocobre Ltd has agreed to acquire Galaxy Resources Ltd in a deal valued at $3.1 billion, resulting in the formation of the fifth-largest lithium producer in the world to capitalize on the rapidly growing global demand for electric vehicle batteries. This is the largest deal in the mining sector so far this year, according to Bloomberg data reviewed by Al Arabiya, with Galaxy being valued at approximately A$3.53 per share, a discount of 2.2% from Friday's closing price. The agreement is supported by both companies' boards, and Martin Perez de Solay, CEO of Orocobre, will head the new group.
Demand for batteries is expected to surge tenfold by 2030 due to electric vehicles, according to the BloombergNEF index. Reg Spencer, head of mining research at Canaccord Genuity Australia Ltd, stated that the new company "will be a globally relevant player in chemical lithium production." He noted that it could grow to become the third-largest producer by 2025 if the company continues to develop all its future projects. Following the merger announcement, Orocobre and Galaxy stocks closed on Monday at their highest levels in over three years.
Orocobre sells most of its lithium carbonate from its unit known as Olaroz in Argentina to Japan and has a supply agreement in place with a joint venture to manufacture battery cells between Toyota and Panasonic.
