Specialty chemicals producer Rockwood Holdings Inc agreed to buy Talison Lithium Ltd. for $724-million to boost its output of lithium used in batteries and smartphones.
Demand for lithium batteries has risen in recent years as they are more efficient and help cut carbon emissions. The rising popularity of smartphones has also helped drive up prices of the metal.
Rockwood, whose peers include Kronos Worldwide Inc., Sensient Technologies Corp., WR Grace and Co. and Valhi Inc., has said it expects battery-grade lithium products to show double-digit sales growth this year.
Lithium business accounted for 14 per cent of Rockwood’s June quarter sales of $905.6-million.
Talison Lithium exports over 350,000 tonnes of lithium products annually, according to the company’s website.
The company’s Greenbushes operations in Western Australia has been producing lithium for over 25 years.
Rockwood said on Thursday it will pay $6.50 per Talison share – a 53 per cent premium to the stock’s Wednesday close on the Toronto Stock Exchange.
Shares of Talison rose 52 per cent to an 18-month high of $6.43 on Thursday on the Toronto Stock Exchange.
Shares of Princeton, N.J.-based Rockwood were down 3 per cent at $46.15 on Thursday on the New York Stock Exchange.
Rockwood said it plans to finance the acquisition using cash on hand and new debt financing.
Lazard advised Rockwood while Macquarie Capital in Australia and Canada are acting as financial advisers to Talison.
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