Mr. Martin Perez de Solay reports

ALLKEM AND LIVENT TO CREATE A LEADING GLOBAL INTEGRATED LITHIUM CHEMICALS PRODUCER

Allkem Ltd. and Livent have signed a definitive agreement to combine the two companies to create a leading global lithium chemicals producer (NewCo). The transaction is expected to close by the end of calendar year 2023, and upon closing of the all-stock merger of equals Allkem shareholders will own approximately 56 per cent and Livent shareholders will own approximately 44 per cent of NewCo (4).

Allkem and Livent announce definitive agreement to combine in an all-stock merger of equals valuing the combined company at $10.6-billion (U.S.) ($15.7-billion (Australian)) (1).

Key highlights:

• Creates a leading global lithium chemicals producer, with pro forma calendar year 2022 combined revenue of approximately $1.9-billion (U.S.) (2) and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately $1.2-billion (U.S.);
• Immediately enhances business-critical scale and global capabilities from closing, strengthening the ability to serve customers with a more resilient supply chain;
• Vertically integrated business model allows enhanced operational flexibility and potential for greater value capture across the value chain;
• Geographically adjacent, high-quality, low-cost asset portfolio in Argentina and Canada creates opportunities to both accelerate and derisk the development of a strong pipeline of attractive growth projects expected to deliver production capacity of approximately 250,000 tonnes per annum LCE (lithium carbonate equivalent) by CY 2027 (3);
• Significant expected run-rate operating synergies of approximately $125-million (U.S.) per annum (pretax) and one-time capital savings of approximately $200-million (U.S.), driven mainly by asset proximity and co-development in Argentina and Canada. Additional synergies expected beyond CY 2027;
• Strong combined balance sheet and cash flow generation provide financial flexibility to deliver accelerated growth plans;
• Enhanced value proposition for shareholders, customers, employees and local communities, with an unwavering commitment to sustainability and responsible growth.

Allkem and Livent, two global lithium chemicals companies, will combine their highly complementary range of assets, growth projects and operating skills across extraction and processing under a vertically integrated business model with the scale and expertise to meet the rapidly growing demand for lithium chemical products. The combined company will have a significant footprint of low-cost assets diversified across key geographies, products and customers. Given the proximity of certain assets in Argentina and Canada, significant cost synergies, and capex savings, commercial synergies are expected to be realized from the opportunity to co-develop and derisk future expansion projects and operations.

Livent is a global leader in lithium processing technologies with nearly eight decades of experience producing a diverse range of lithium chemicals for energy storage and other specialty applications. Allkem brings complementary expertise in conventional brine-based lithium extraction, hard rock mining and lithium processing. With Livent's technical and commercial capabilities, and its deep customer relationships, and Allkem's large and diverse resource base and significant growth pipeline, NewCo will be well positioned to capitalize on the expected growth in lithium demand from electric vehicles (EVs) and energy storage solutions.

Livent's president and chief executive officer, Paul Graves, said: "I am excited for what lies ahead as Livent and Allkem combine forces to help power the transition to EVs, cleaner energy and a more sustainable future. We look forward to playing an even bigger role in the acceleration of decarbonization policies by providing the lithium needed to enable this critical global energy shift. As a combined company, we will have the enhanced scale, product range, geographic coverage and execution capabilities to meet our customers' rapidly growing demand for lithium chemicals. This transaction will capitalize on our highly complementary business models and our collective strengths, including our best-in-class technologies, assets and people, to be a leading force in our industry driving growth in EV and energy storage applications. Together we can accelerate our growth plans and deliver more lithium, more reliably and more quickly, than either of us can do alone. Jointly, we are committed to growing responsibly and supporting the communities where we operate, and we look forward to executing on our shared long-term vision."

Allkem's chief executive officer, Martin Perez de Solay, said: "The combination of Allkem and Livent is transformational, with compelling strategic logic and marks a significant milestone in our efforts to grow the company. We are bringing together two highly complementary businesses to create a leading global lithium chemicals company, building on Allkem's demonstrated track record of integration. The vertically integrated NewCo will improve delivery of high-quality, value-added products to our diverse customer base and unlock material synergies. The combination brings together teams with strong expertise in project development, product innovation and marketing, and sets us up for a faster and derisked delivery of the next phase of our growth. I believe Allkem shareholders will realize significant benefits from the transaction as the business transforms into a truly global player with listings in the U.S. and Australia. We will maintain our joint commitment to safety, quality and productivity, and through increased scale we can also improve outcomes for our employees, customers, partners and the communities in which we operate."

Strategic benefits of the combination:

• Creates a leading global lithium chemicals producer with enhanced business-critical scale and greater capacity to meet growing customer demand:
  • Large, high-quality, low-cost asset footprint with one of the world's largest lithium deposit bases;
  • Multiple lithium chemical manufacturing facilities able to deliver a broad range of lithium performance chemicals globally;
  • Increased economies of scale and resources through NewCo's geographically adjacent asset portfolios in Argentina and North America;
  • Leading Americas-based lithium platform with ability to serve growing regional demand amid customer focus on assured security of supply and more localized supply chains;
  • Positioned to be a leading battery-grade lithium supplier;
  • Large and growing global customer base across EV and energy storage value chains, with strong customer relationships from both companies;
• Highly complementary and vertically integrated business model:
  • Enables vertical integration across the lithium value chain with the broadest product offering;
  • Highly scalable across both resource and production assets; expected to immediately enhance operational flexibility and reliability, resulting in lower cost and greater value capture;
  • Complementary expertise in brine and hydroxide processing with proven ability to produce high-quality products that are sought after by leading battery manufacturers and EV original equiment manufacturers;
  • Expansion of research and development capabilities to develop innovative and sustainable products and processes;
• Greater capacity and execution expertise to accelerate growth:
  • Allows delivery of growth commitment faster and derisks path to approximately 250 ktpa LCE by calendar year-end 2027 (5);
  • Significant pipeline of advanced growth projects to create value for all stakeholders;
  • Complementary expertise in hard rock mining, conventional and DLE (direct lithium extraction) based processes, and lithium carbonate and hydroxide production;
• Creating a global leader to capture the decarbonization opportunity through EV and battery storage solutions:
  • Sector-leading ESG policies with a shared commitment to grow responsibly and pursue best practices across environmental stewardship, sustainability, community development and corporate governance;
  • Participation in industry efforts to advance transparency, safety, responsible operations, rigorous supply chains, and community engagement and development.

Significant financial benefits

The combination is expected to create substantial value for the shareholders of both companies through:

• Value creation from the synergistic combination and close proximity of assets, with additional synergies expected beyond CY 2027:
  • Estimated run-rate operating cost synergies of approximately $125-million (U.S.) (pretax) per annum from selling, general and administrative costs, asset optimization, and logistics and procurement savings. A significant portion of the synergies are expected to be realized through removing duplicate costs, improvement of procurement, site management, transport and logistics functions at Sal de Vida, Hombre Muerto and Quebec, and through closer integration of operations. The majority of the annual run-rate pretax operating cost synergies are expected to be realized within three years;
  • Further synergies are expected to be realized from the sharing of technological expertise, improved flexibility in product flows, plant optimization and enhanced marketing efficiencies;
  • In addition to operating synergies, NewCo is expected to realize approximately $200-million (U.S.) in one-time capital expenditure savings, driven by the consolidation of shared infrastructure, streamlining construction and procurement, and leveraging complementary engineering work at Hombre Muerto and Sal de Vida, as well as at a co-located spodumene to hydroxide facility processing materials from the Quebec spodumene resources;
• Transaction metrics:
  • Exchange ratio determined based on each company's estimated relative contribution to risk-adjusted net asset value (NAV) (presynergies);
  • Transaction is expected to be immediately accretive to both Livent's and Allkem's shareholders on a NAV (net asset value) per share basis, reflecting the material synergies expected to be realized from the transaction (net of costs to achieve);
  • The transaction results in Allkem shareholders owning approximately 56 per cent of NewCo compared with 53 per cent implied by the volume-weighted average share prices over a one-month period (6);
• Stronger financial profile positions the combined entity to deliver growth:
  • Strong balance sheet with combined liquidity of $1.4-billion (U.S.) and limited indebtedness (7);
  • Positive cash flow generation provides the financial strength needed to accelerate the growth strategy;
• Greater liquidity for investors and more diversified shareholder base:
  • Greater liquidity for investors through a primary listing on the New York Stock Exchange (NYSE) and a foreign exempt listing on the Australian Securities Exchange (ASX) via Chess depository interests (CDIs);
  • Seeking U.S. index inclusion on implied combined market capitalization and pro rata CDI inclusion in the S&P/ASX 200 index;
• Tax-free all-stock transaction:
  • Share-for-share exchange transaction expected to be a tax-free transaction for shareholders.

Transaction structure

NewCo will have a primary listing on the NYSE and maintain a foreign exempt listing on the ASX (via the issue of CDIs to Allkem shareholders). Under the terms of the transaction, existing Allkem shareholders will receive one NewCo ASX-listed CDI (or be able to elect to receive one NewCo NYSE-listed share instead of a CDI) for each Allkem ordinary share held, except for shareholders in certain ineligible jurisdictions, who will receive cash proceeds from the sale of the NewCo CDIs in lieu of such CDIs after closing. Under the merger, Livent shareholders will receive 2.406 NewCo NYSE-listed shares of common stock for each Livent share held. Following the transaction, Allkem and Livent shareholders are expected to own approximately 56 per cent and 44 per cent of the combined company, respectively.

Governance and leadership

The transaction agreement and the transaction have been unanimously approved by the board of directors of each company, and, in the case of Allkem, subject to the independent expert concluding, and continuing to conclude, that the scheme is in the best interest of Allkem shareholders.

The combined company will benefit from proven and experienced business leaders at both the board and executive levels, along with diverse, high-performing teams at NewCo's operating sites.

NewCo is to be incorporated in the Bailiwick of Jersey, with corporate headquarters to be in North America, with the exact location and company name to be announced at a later date, and corporate residency to be in Ireland.

Upon completion of the transaction, Peter Coleman will become the chairman of NewCo, Mr. Graves will become the chief executive officer of NewCo, and Gilberto Antoniazzi will become the chief financial officer of NewCo. The NewCo board will have 14 members, consisting of seven directors designated by Allkem and seven directors designated by Livent. The commercial, operational and capital deployment teams will comprise representatives from both companies. Allkem CEO Mr. Perez de Solay will provide consulting services to NewCo to help facilitate a smooth integration process posttransaction close.

Closing conditions, other key terms and timing

Closing of the transaction is subject to the satisfaction or waiver of customary closing conditions, including receipt of regulatory approvals, approval by both Livent and Allkem shareholders, the independent expert concluding that the scheme is in the best interest of Allkem shareholders and not changing, withdrawing or qualifying that conclusion, tax opinion delivery and Australian tax class ruling confirmation, and Australian court approval.

Allkem and Livent shareholders do not need to take any action at this time. An explanatory statement and notice of meeting containing important information about the scheme will be dispatched to Allkem shareholders and released on ASX in due course, likely in the second half of calendar year 2023. A proxy statement/prospectus containing important information about the merger will be dispatched to Livent shareholders and filed with the U.S. Securities and Exchange Commission (SEC) in due course. Subject to the satisfaction or waiver of the conditions to closing, the transaction is expected to close by the end of calendar year 2023.

The transaction agreement includes reciprocal exclusivity arrangements (including notification obligations) in favour of both parties, a matching right regime in favour of both parties and termination fees in favour of both parties. The exclusivity arrangements are subject to customary exceptions that enable the directors of Allkem and Livent to comply with their respective fiduciary and/or statutory duties.

The full terms of the transaction, including the closing conditions, are set out in the transaction agreement, a copy of which is attached to this announcement.

Advisers

Gordon Dyal & Co. LLC is acting as exclusive financial adviser, and Davis Polk & Wardwell LLP and Allens are acting as legal counsel to Livent.

UBS Securities Australia Ltd. and Morgan Stanley & Co. LLC are acting as financial advisers, and King & Wood Mallesons and Sidley Austin LLP are acting as legal counsel to Allkem.

Analyst and investor briefing

Livent and Allkem will each host a conference call for their respective analysts and investors in the U.S. and Australia. Management from both companies will participate.

The Livent-hosted joint conference call will be held at 8 a.m. ET to discuss the transaction. Participants can access the call via webcast. The live webcast and related presentation materials can be accessed through the investor relations section of the Livent website and will be archived for a period of 12 months.

The Allkem-hosted joint conference call will be held at 9:30 a.m. Australian EST on May 11 to discuss the transaction. Participants can access the call via webcast. The live webcast and related presentation materials can be accessed through the investor relations section of the company's website and will be archived.

About Livent

For nearly eight decades, Livent has partnered with its customers to safely and sustainably use lithium to power the world. Livent is one of only a small number of companies with the capability, reputation and know-how to produce high-quality finished lithium compounds that are helping meet the growing demand for lithium. The company has one of the broadest product portfolios in the industry, powering demand for green energy, modern mobility, the mobile economy and specialized innovations, including light alloys and lubricants. Livent has a combined work force of approximately 1,350 full-time, part-time, temporary and contract employees, and operates manufacturing sites in the United States, England, China and Argentina.

About Allkem Ltd.

Allkem is a specialty lithium chemicals company with a global portfolio of diverse and high-quality lithium chemicals. Headquartered in Buenos Aires, Argentina, the company's unique portfolio includes lithium brine operations in Argentina, a hard rock lithium operation in Australia, a hard rock development project in Quebec and a lithium hydroxide conversion facility in Japan. Development is under way across the globe to increase international scale and product flexibility to meet significant projected demand growth that is underpinned by a global transition to a net zero carbon future. Allkem's pillars of success are built on safety, sustainability, cost leadership and product quality, through relations with our people, partners, customers and communities.

(1) Based on the combined market capitalization of Allkem and Livent and a U.S.-to-Australian-dollar foreign exchange rate of 0.676. The market capitalization of Livent ($5.1-billion (U.S.)) has been calculated by reference to the closing price of Livent shares on NYSE on May 9, 2023, of $24.23 (U.S.) per Livent share and 209.5 million Livent fully diluted shares on issue. The market capitalization of Allkem has been calculated by reference to the closing price of Allkem shares on ASX on May 9, 2023, of $12.83 (Australian) per Allkem share and 641.5 million Allkem fully diluted shares on issue.

(2) Allkem's results are based on its international financial reporting standards results for the last 12 months ended Dec. 31, 2022, and are unaudited. The combined financial information is a simple summation of Livent's and Allkem's results for Livent's fiscal year ended Dec. 31, 2022, and Allkem's 12 months ended Dec. 31, 2022, and is not presented in accordance with Article 11 of Regulation S-X. Pro forma information prepared according to Article 11 of Regulation S-X may be substantially different from the combined information included in this announcement.

(3) Refer to pages 23 to 28 of the investor presentation dated May 10, 2023, which is available to view on the company's website or the Australian Securities Exchange website (investor presentation), for information underpinning the production targets, production capacities and other forward-looking statements of that nature for NewCo. Allkem confirms that all material assumptions underpinning the production targets, production capacities and other forward-looking statements of that nature of NewCo in the investor presentation continue to apply and have not materially changed. Refer to page 11 of the important information and legal disclaimer for further information in relation to the production targets of NewCo.

(4) All ownership ratios in this release based on fully diluted share counts.

(5) Refer to pages 23 to 28 of the investor presentation for information underpinning the production targets, production capacities and other forward-looking statements of that nature for NewCo. Allkem confirms that all material assumptions underpinning the production targets, production capacities and other forward-looking statements of that nature of NewCo in the investor presentation continue to apply and have not materially changed. Refer to page 11 of the important information and legal disclaimer for further information in relation to the production targets of NewCo.

(6) This implies a premium of approximately 14 per cent to Allkem shareholders measured using volume-weighted average share prices over one-month from April 10, 2023, to May 9, 2023. The premium is calculated assuming Allkem shareholders contribute their shares to the merged entity at an implied price of $13.54 (Australian) per share, calculated using the Livent one-month volume average weighted price over the same period of $21.81 (U.S.), the agreed exchange ratio of 2.406 NewCo shares per Livent share, and the daily U.S.-to-Australian-dollar foreign exchange rates over the period.

(7) Merged group pro forma liquidity position based on: (i) Allkem's available cash position as of March 31, 2023, as set out in Allkem's March, 2023, quarterly report dated April 20, 2023, which was prepared in accordance with the requirements of the Corporations Act 2001 (Cth), Australian accounting standards and interpretations issued by the Australian Accounting Standards Board (AASB) and international financial reporting standards (IFRS) issued by the International Accounting Standards Board (IASB); and (ii) Livent's cash and equivalents, and available funds under revolving credit facilities position as of March 31, 2023, as set out in Livent's Form 10-Q dated May 4, 2023, which was prepared in accordance with U.S. GAAP. As the merged group pro forma cash position has not been prepared in accordance with a consistent set of recognized accounting standards (either in accordance with the Australian standards or the U.S. standards), this information is provided for illustrative purposes only, and shareholders are accordingly cautioned not to place undue reliance on this information.

We seek Safe Harbor.