Chemicals maker Albemarle Corp.’s (ALB) proposed acquisition of Rockwood Holdings, Inc. (ROC) for $6.2 billion has been cleared by shareholders of both companies at their respective special meetings.
Albemarle agreed to acquire Rockwood in Jul 2014 in a cash and stock deal. Under the deal terms, the company agreed to pay $50.65 in cash and 0.4803 of a share of its stock for each outstanding Rockwood share.
Albemarle shareholders, at the special meeting, approved the issue of the company’s common stock to Rockwood shareholders in connection with the deal. On the other hand, Rockwood shareholders cleared the adoption of the deal and plan of merger, pursuant to which a fully-owned unit of Albemarle will merge with Rockwood with Rockwood becoming a fully-owned subsidiary of Albemarle.
The shareholder clearance follows the approval of the transaction by the European Commission on Nov 13. Albemarle also secured the U.S. antitrust approval for the transaction in Sep 2014.
With the shareholder approval, Albemarle has moved a step closer to completing the acquisition. The transaction, which is now subject to other closing conditions including regulatory clearances in China, is expected to close in first-quarter 2015.
Albemarle’s shares ticked up 0.4% to $62.11 in the trading session last Friday before retracing to close the day lower at $61.74. Rockwood’s shares gained 0.6% to close at $79.19 on Nov 14, after rising around 1.1% during trading hours.
Following the closure of the transaction, Albemarle’s shareholders will own roughly 70% of the merged company with Rockwood shareholders holding the balance. Albemarle's CEO Luke Kissam will be the President and CEO of the combined entity which will operate under the “Albemarle” banner.
Albemarle has secured committed financing from BofA Merrill Lynch to fund the cash portion of the deal. BofA Merrill Lynch is serving as financial advisor to Albemarle while Lazard (LAZ) and Citigroup (C) are acting as financial advisors to Rockwood.
The move accentuates both companies’ efforts to shore up growth by creating a premier specialty chemicals company with leading market position in an array of high-margin businesses including lithium, surface treatment and refinery catalysts.
The deal brings together two leading specialty chemicals makers with strong market positions and complimentary product portfolios. The merged entity will have greater customer reach, enhanced diversity across end markets, technologies and geographies.
The integrated company will be well positioned to boost earnings by expanding the reach of lithium-based energy storage products including batteries for the automotive industry, leveraging attractive trends in refinery catalysts including rising demand for transportation fuels, expanding in the bromine markets through new applications and capitalizing on its leading position in surface treatment products.
Albemarle envisions the acquisition to be accretive to its cash earnings per share in the first year and adjusted earnings per share in the second year. In addition, it expects around $100 million in cost synergies by 2016.
Both Albemarle and Rockwood hold a Zacks Rank #3 (Hold).
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