Rockwood Holdings Inc. (ROC:US), the world’s largest producer of lithium products, agreed to acquire Talison Lithium Ltd. for about C$724 million ($728 million) to diversify its supply of the metal used in rechargeable batteries.
Investors will get C$6.50 a share, Perth, Australia-based Talison said yesterday in a statement. That’s 56 percent more than the average share price over the preceding 20 days, according to data compiled by Bloomberg. Resource Capital Funds LP, which holds 37 percent of shares, supports the deal, Talison said.
Talison is the world’s largest producer of lithium ore, Timothy McKenna, a Rockwood spokesman, said yesterday by telephone. About one-quarter of lithium is extracted from ore while three-quarters comes from lithium-rich brine, he said. Princeton, New Jersey-based Rockwood, led by Chairman and Chief Executive Officer Seifi Ghasemi, makes lithium-based products used in ceramics and batteries for electric vehicles.
“We like this deal for Rockwood as it makes them the clear global leader in lithium,” Chris Shaw, an analyst at Monness, Crespi, Hardt & Co. in New York, said in a note. “This deal is less about the immediate benefits of accretion but more of a long-term strategic move.”
Talison rose 53 percent to C$6.50 at the close in Toronto yesterday, the biggest gain since September 2010. Rockwood dropped 1.2 percent to $46.89 in New York.
Rockwood is paying more than 33 times Talison’s earnings before interest, taxes, depreciation and amortization. The median Ebitda multiple in three comparable non-ferrous-metal company takeovers with a value of at least $100 million announced in the past two years was 15, according to data compiled by Bloomberg.
Rockwood said in April it was considering a sale or an initial public offering for its Sachtleben titanium-dioxide unit. The Talison deal is a surprise, Shaw said.
“Everyone has been focused on Rockwood’s attempt to get rid of assets,” he said.
Lazard Ltd. (LAZ:US) is Rockwood’s financial adviser on the deal and Gilbert & Tobin is its legal counsel. Macquarie Capital is advising Talison.
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