Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Albemarle Pays A Stiff Price For A Premium Asset

I wrote about Rockwood Holdings (NYSE:ROC) in December of 2013 and thought at the time that it was a very high-quality specialty chemical company, with an attractive cost-advantaged lithium business, but an expensive stock. That opinion worked reasonably well until today, as other chemical companies like BASF (OTCQX:BASFY) and Taminco (NYSE:TAM) had been outperforming the shares. That's all moot now, though, as Albemarle (NYSE:ALB) has stepped up with a premium buyout offer for this specialty chemical company.

For Albemarle's part, they're paying up to add a well-run surface treatments business and grab the growth potential of Rockwood's top-notch lithium operations. Paying 14x 2014 pro-forma EBITDA (and more than 11x assuming synergies) is...

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