The Galaxy Resources Limited (ASX: GXY) share price and the Orocobre Limited (ASX: ORE) share price were on form on Friday.
Both lithium miners finished the day almost 3% higher and within sight of their 52-week highs.
Why did Galaxy and Orocobre shares storm higher?
Investors were buying Galaxy and Orocobre shares on Friday after their mega-merger took a big step forward.
According to a joint announcement, the Supreme Court of Western Australia has made orders for Galaxy to convene a meeting of shareholders to consider and vote on the proposed merger that will see Orocobre acquire all of the shares in Galaxy by way of a scheme of arrangement.
The Court has also approved the dispatch of an explanatory statement providing information about the scheme, together with the scheme meeting notice to Galaxy shareholders.
What are the merger terms?
In April, the two companies agreed to a proposed $4 billion merger of equals, which they believe establishes a new force in the global lithium sector.
Management notes that the merger would create the fifth largest global lithium chemicals company, with a diversified production base and exciting growth platform. It also sees potential to unlock significant synergies and realise value to be shared by all shareholders.
The merger will see Galaxy shareholders receive 0.569 Orocobre shares for each Galaxy share held at the scheme record date. Based on the current Orocobre share price of $6.62, this represents approximately $3.77 per share.
The scheme continues to be unanimously recommended by each director of Galaxy, subject to no superior proposal emerging and the independent expert continuing to conclude that the scheme is in the best interests of shareholders. Each Galaxy director intends to vote in favour of the scheme, subject to those same qualifications.
What now?
Galaxy shareholders will be given the opportunity to vote on the proposed scheme in just over a month on 6 August.
If all goes to plan, the scheme will become effective on 16 August and new Orocobre shares will commence trading on the ASX on 17 August.
The post Galaxy (ASX:GXY) and Orocobre (ASX:ORE) shares rise on merger update appeared first on The Motley Fool Australia.
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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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