Galaxy (ASX:GXY) share price rises as Orocobre merger draws closer

The Galaxy share price will be leaving the ASX boards soon…

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asx share price increase represented by golden dollar sign rocketing out from white domes of lithium

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The Galaxy Resources Limited (ASX: GXY) share price is pushing higher again on Monday.

In afternoon trade, the lithium producer’s shares are up over 2% to $5.50.

Where next for the Galaxy share price?

The days are numbered for the Galaxy share price after its merger with rival Orocobre Limited (ASX: ORE) took another step towards completion on Monday.

According to an announcement, this morning the company lodged with the Australian Securities and Investments Commission (ASIC) a copy of the orders of the Supreme Court of Western Australia approving the Orocobre merger.

As a result of this, the scheme is now legally effective and will be implemented on Wednesday 25 August.

What’s next?

The merger has been set up in a way that will see Orocobre acquire all of the shares in Galaxy by way of a scheme of arrangement.

That arrangement sees Galaxy shareholders receive 0.569 new fully paid ordinary shares in Orocobre for each Galaxy share held at the scheme record date of 18 August.

Based on the current Orocobre share price of $9.68, this equates to approximately $5.50 per share. Which is where the Galaxy share price is trading at present.

Galaxy-Orocobre as a merged entitty

The merger of Galaxy and Orocobre will create the fifth largest global lithium chemicals company in the world with a combined market value of approximately $6 billion at today’s valuations.

Management notes that it will have a diversified production base and exciting growth platform. It also sees the potential to unlock significant synergies and realise value to be shared by all shareholders.

The unnamed new company, which is due to be rebranded shortly, will be led by Orocobre’s CEO Martín Pérez de Solay. Galaxy’s Martin Rowley will be supporting him as Non-Executive Chairman.

The Galaxy share price is now up 138% since the start of the year.

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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