Albemarle Corp. has agreed to pay about $6.2 billion in a cash-and-stock offer to acquire Rockwood Holdings Inc., a deal that will combine two of the world’s largest specialty chemicals producers as they angle to further penetrate the lithium-based energy storage products industry and other new technologies.
Under the terms of the deal, Rockwood (ROC) shareholders will receive $50.65 in cash and 0.4803 shares in Albemarle (ALB) for every share they hold. The deal values Rockwood at $85.53, a 13% premium based on Monday’s closing price.
Upon closing, Baton Rouge-based Albemarle will own about 70% of the combined company while Rockwood shareholders will own the rest.
The boards of directors at both companies have signed off on the deal, which is expected to close in the first quarter of 2015.
The merger will combine Albemarle, which generated $2.62 billion in sales in 2013, with smaller peer Rockwood–which posted $1.38 billion in annual revenue last year. The deal is expected to add to cash earnings in the first year, add to adjusted earnings on a per-share basis in the second year, and “substantially” boost earnings thereafter. Albemarle has outlined a plan to realize about $100 million in annual cost synergies, primarily by eliminating duplicative costs and better purchasing power as a result of the combined company’s size.
Albemarle President and Chief Executive Luke Kissam will continue to lead the combined company, which will operate under Albemarle’s name. The new company’s board will have 11 members, with eight Albemarle directors and three from Rockwood.