Jul. 15, 2014, 2:49 PM
- It isn't just Rockwood's (ROC +11.9%) lithium technology that's driving Albemarle's (ALB -0.6%) $6.2B takeover offer - it's good ol' cheap money, Heard on the Street's Liam Denning writes.
- At the end of Q1, ALB’s net debt stood at less than 1x EBITDA, unfashionable with investors when ultra-low interest rates ensure returns on cash are a pittance; with the deal, ALB expects net debt to jump to 3.5x EBITDA with higher cash flows reducing that number quickly, just like a leveraged buyout.
- Credit Suisse likes the deal and raises its price target for Outperform-rated ALB to $90, but Oppenheimer downgrades shares to Underperform, saying the acquisition looks like a "defensive transaction."
Jul. 15, 2014, 7:02 AM
- Albermarle (NYSE:ALB) has agreed to purchase rival Rockwood Holdings (NYSE:ROC) in a cash-and-stock deal for approximately $6.2B.
- The agreement values Rockwood at $85.53 per share - a 13% premium to its yesterday's closing price. Albemarle will pay $50.65 in cash and 0.4803 shares for each share of Rockwood stock.
- Rockwood announced net sales of $355M for Q1; Albemarle posted $656M.
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Albemarle Corp is a developer, manufacturer and marketer of engineered specialty chemicals. It provides its sevices to end markes including petroleum refining, consumer electronics, construction, automotive, lubricants and pharmaceuticals.
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