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Albemarle to use $1.5 billion of new debt to acquire Rockwood Holdings
By Lisa Kerner
Charlotte, N.C., July 15 – Albemarle Corp. will finance its $6.2 billion acquisition of Rockwood Holdings, Inc. using a combination of cash and new debt, according to Albemarle chief financial officer Scott Tozier.
“The transaction will be financed through $2.2 billion of existing cash, $1.5 billion in new debt financing and $2.5 billion in equity with approximately 34.7 million new shares issued at closing,” Tozier said during a conference call on Tuesday.
“We have financing commitments in place from Bank of America Merrill Lynch, and our financing plan and deal structure is consistent with our focus on maintaining our investment-grade status,” he added.
Albemarle expects its net debt-to-EBITDA, including synergies, to be 3.5 times at closing. The company plans to use the expected combined free cash flow of more than $500 million to quickly delever the $3.7 billion of expected net debt.
The company will guarantee Rockwood’s $1.25 billion of notes due 2020. When asked about the debt, Tozier said Albemarle will assess its ability to take advantage of any calls.
With plans to rapidly delever, Tozier said Albemarle plans to suspend its share repurchase program but will maintain its annualized dividend of $1.10 per share.
The transaction is slated to close in the first quarter of 2015.
Transaction details
Under the terms of the transaction, each outstanding share of Rockwood common stock will be exchanged for $50.65 in cash and 0.4803 of a share of Albemarle common stock. The transaction values Rockwood at $85.53 per share, a 13% premium based on Monday’s closing stock prices, according to a company news release.
Baton Rouge, La.-based Albemarle is a manufacturer of polymers and fine chemicals.
Princeton, N.J.-based Rockwood is a specialty chemicals and advanced materials company and is a wholly owned subsidiary Rockwood Specialties Group, Inc.
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