Australian lithium miner Orocobre Ltd is buying smaller domestic peer Galaxy Resources for $1.4 billion to create the world’s fifth most valuable producer of the key raw material for electric vehicle batteries.

The all-stock deal for A$1.78 billion ($1.38 billion)announced on Monday, which will also establish Australia’s most valuable lithium miner with a A$4 billion market capitalisation, comes as demand for the material is booming amid a jump in global sales of electric vehicles.

Shares of both companies hit more than three year highs in early trade, with Orocobre gaining about 6% to A$6.56 and Galaxy rising 4% to A$3.75.

The merged company will have a strong balance sheet with $487 million in cash, better access to finance and streamlined product marketing.

Read more at Reuters

By Reuters, Shruti Sonal, Melanie Burton

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