Share in Allkem shot up 14 per cent on the announcement.

The two companies announced the merger overnight and claim the as-yet unnamed merged company would be a global leader in lithium chemicals.

The ASX-listed Allkem shareholders would own about 56 per cent of the merged company, transitionally known as Newco. Allkem has projects in Western Australia and Argentina.

The companies said the merger would create a company that had low-cost assets across key diversified geographies. Synergies would also be gained though both companies holding assets in Canada and Argentina.

Livent chief executive Paul Graves said he was excited at what was ahead for the merged company, particularly through the growth of electric vehicles and clean energy. Lithium is a major component of batteries used in EVs, homes as well as mobile phones and grid storage.

“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,” Graves said.

Allkem chief executive Martin Perez de Solay said the merger had compelling logic.

“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,” he said.

Allkem was created out of the merger of Galaxy Resources and Orocobre.

The companies claim the estimated run-rate operating synergies were about $US125 million a year. They said the merger would be “immediately accretive” to both company’s shareholders.

The merged company would have a primary listing on the New York Stock Exchange and would become a foreign listing on the ASX through Chess depository interests.