Rockwood Was in Talks With Four Others Before Albemarle Deal

Aug 28, 2014 4:17 pm ET

(Updates with comment from analyst in third paragraph.)

Aug. 28 (Bloomberg) -- Rockwood Holdings Inc. was in talks with four other companies before the world’s biggest lithium producer agreed to be bought by Albemarle Corp. last month for $6.2 billion.

A week before the announcement that Albemarle would acquire it for $85.53 a share in cash and stock, “Company C” made a non-binding offer of $80 a share, Princeton, New Jersey-based Rockwood said in a filing today. The company didn’t increase the offer when it was told a higher bid had been made. Rockwood didn’t respond to phone messages seeking the identity of Company C.

The bidder might be Platform Specialty Products Corp., a chemical company whose largest shareholder is Bill Ackman, said Sachin Shah, a strategist at Albert Fried & Co. LLC in New York. Platform “might still have time to come back with an offer,” which would probably have to be $90 a share, Shah wrote in an e- mail today. Miami-based Platform, which has gained 92 percent this year, declined to comment.

Rockwood is the largest of four companies that control about 90 percent of global lithium production, according to Jefferies Group LLC. Demand for the metal used in batteries for smartphones and electric cars is expected to increase three times faster than the global economy.

CEO Dinners

By acquiring Rockwood, Platform would almost triple its earnings before interest, taxes, depreciation and amortization to $771 million from $281 million, Shah said. Pershing Square Capital Management, Ackman’s hedge fund, held 24 percent of the stock as of June 30, according to data compiled by Bloomberg.

Rockwood rose 1.2 percent to $80.76 at the close in New York. Platform climbed 3.3 percent and Albemarle increased 1.3 percent.

Albemarle’s chief executive officer mentioned his interest in Rockwood’s lithium business at dinners in May 2012 and in August 2013, according to the filing. After shedding some business units, Rockwood actually made a non-binding offer in September to buy Baton Rouge, Louisiana-based Albemarle for $72 a share in cash -- a bid that was rejected.

After refusing Albemarle’s proposal for a premium-free merger of equals, Rockwood met with six other specialty chemical companies and received bids for portions of its business. The board directed its financial adviser to talk with four companies that would buy all of Rockwood, before deciding in favor of the Albemarle bid.