Specialty and advanced materials company
Rockwood Holdings Inc.
) entered into an agreement to buy Talison Lithium Limited
for C$724 million ($729 million) to boost the production of
lithium used in batteries and smartphones.
The deal is, however, subject to the approval of Talison
shareholders and other customary closing
Rockwood believes that the acquisition will help expand its lithium
business and enable it to better serve its existing customers as
well as Talison's customers in China and rest of the world. Talison
is a leading global producer of lithium, and supplies its customer
network from the Greenbushes Lithium Operations in Western
Rockwood plans to finance the acquisition using its cash in hand
and new debt. Lazard will act as an exclusive financial advisor to
Rockwood, and Gilbert & Tobin will be its legal counsel.
Earlier this month, Rockwood released its second quarter financial
results for 2012. Adjusted earnings of $1.17 per share lagged both
the Zacks Consensus Estimate of $1.19 and the year-ago quarter
earnings of $1.19.
Reported profit more than doubled to $224.9 million or $2.81 per
share in the quarter from $94.5 million or $1.11 a year ago,
primarily driven by an income tax benefit of $139 million.
Revenues declined 9.4% year over year to $905.6 million, due to
a negative currency translation of $75.1 million. It failed to meet
the Zacks Consensus Estimate of $987 million. A major portion of
Rockwood's net sales and cost of products sold are determined in
euros and thus any unfavorable currency fluctuation can affect the
company's top line.
The company's lithium, surface treatment and advanced ceramics
businesses improved on a year-over-year basis, excluding negative
currency effects. Its lithium business improved on the back of
higher selling prices and increased volumes of lithium battery
products, partially offset by currency changes and lower volumes of
butyllithium in Asia.
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ROCKWOOD HLDGS (ROC): Free Stock Analysis
SIGMA ALDRICH (SIAL): Free Stock Analysis
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Rockwood, which competes with
PPG Industries, Inc (
Sigma Aldrich Corporation
), currently retains a Zacks #4 Rank, reflecting a short-term (1 to
3 months) Sell rating.