Today witnessed an uptick in Piedmont Lithium's share value.
Today witnessed an uptick in Piedmont Lithium's share value.
Lithium mining company shares of Piedmont Lithium (PLL) saw a 15.5% surge in value by 10:05 a.m. ET on Thursday, with investors still processing news of Piedmont's planned merger with Australian firm Sayona Mining. The initial response to this merger information, revealed on Monday night, was not positive. In fact, on Monday, Piedmont stock closed at $12.25 per share before the announcement and remained unchanged at that price after the announcement the next day. On Wednesday, investors sold off Piedmont Lithium shares by 14.5%.
The situation now is complicated, with Piedmont's stock now experiencing a 15.5% rise on the third day. Is this good news or bad news for investors?
A significant development in Australia
Piedmont and Sayona describe their upcoming arrangement as an "all-stock merger," meaning that shareholders of both companies will own approximately 50% of the new company, tentatively named "MergeCo," after the deal closes in the first half of 2025.
Piedmont CEO Keith Phillips commented that "MergeCo will be North America's largest lithium producer," focusing on hard-rock mining of lithium-containing spodumene minerals. The merged company will maintain listings in both Australia and on the Nasdaq.
Analysts on Wall Street are seemingly neutral about the news, rating both Piedmont and Sayona as "neutral" following the announcement. Australian investment bank Macquarie has given this rating to both stocks.
Should you invest in Piedmont Lithium stock?
The merger will involve issuing each Piedmont shareholder American depositary shares equivalent to 527 Shareona shares, once the merger is sealed. Since each Australian share currently sells for $0.03.4, the combined value of Piedmont's shares would be approximately $17.92 per share if the merger takes place.
If you believe the merger will come to fruition, investing in Piedmont Lithium stock at its current cost of around $12 per share may be a logical move. However, be aware that the value of the stock could plummet if the merger does not go through.
The current surge in Piedmont Lithium's stock price might be a source of confusion for investors, considering the initial negative response to the merger announcement. This recent financial movement could be seen as a sign of renewed investor interest or optimism towards the merger with Sayona Mining.
Macquarie, a prominent Australian investment bank, has maintained a neutral rating towards both Piedmont and Sayona after the merger announcement, suggesting a wait-and-see approach for potential investors.