Boston, MA 07/16/2014 (wallstreetpr) – Albemarle Corporation (NYSE:ALB), a specialty chemical maker, announced a deal to purchase its rival Rockwood Holdings, Inc. (NYSE:ROC) for about $6.2 billion in cash-and-stock transaction.
The deal will lead to the creation of the world’s largest specialty chemical maker that is focused on chemicals areas like bromine, lithium, catalysts and surface treatment chemical.
Benefits from the acquisition
According to Luther C. Kissam, the President and CEO of Albemarle Corporation (NYSE:ALB), the combined company will enjoy wider customer reach, increased geographies, diversity, consistency and more technologies. All of which are expected to lead to predictable revenue and earnings growth.
Officials at Albemarle also expect the combined company to realize at least $100 million in annual cost-savings.
The acquisition of Rockwood (NYSE:ROC) is expected to close in 1Q2015. Shareholders and the regulator are expected to weigh in on the matter as it progresses to the next level towards a close next year.
Rockwood is based in Princeton, N.J. The company has a marked cap slightly above $6 billion according to Tuesday closing. It generated $354.5 million in net revenue in 1Q2014. The company’s products are used in automotive, aerospace and metal processing industries.
On the other hand, Albemarle Corporation (NYSE:ALB) operates in more than 100 countries, and it generated net revenue in the neighborhood of $656 million in 1Q.
Under the purchase agreement, Albemarle Corporation (NYSE:ALB) will pay $85.53 for each share of Rockwood (NYSE:ROC), suggesting 13 percent premium on Rockwood’s closing price on the day before the announcement of the deal. As such, Albemarle will pay $50.65 per share in cash and issue 0.4803 of its shares to shareholders of Rockwood for each share owned.
Majority stake
After the transaction is closed, shareholders of Albemarle Corporation (NYSE:ALB) will own 70 percent of the combined company while shareholders of Rockwood will own the rest. Mr. Kissam, the current President and CEO of Albemarle, will remain as the president and CEO of the combined company.
Bank of American Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) were also involved in the deal as advisors.
