Acquisition of Rockwood Holdings, Inc. by Albemarle Corporation May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Rockwood Holdings, Inc. (NYSE: ROC) by Albemarle Corporation (NYSE: ALB). On July 15, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which Albemarle will acquire Rockwood. Under the terms of the agreement, Rockwood common stockholders will receive $50.65 in cash and 0.4803 shares of Albemarle common stock, for a total consideration of $85.53 per share. Following the closing of the transaction, Albemarle shareholders will own approximately 70% of the combined company and Rockwood shareholders will own 30%.
Is the Proposed Acquisition Best for Rockwood and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Rockwood is undertaking a fair process to obtain maximum value and adequately compensate Rockwood shareholders.
As an initial matter, the $85.53 merger consideration represents a premium of just 13% based on Rockwood’s closing price on July 14, 2014. This premium is significantly below the average one-day premium of nearly 16% for comparable transactions in the past five years. Further, the $85.53 merger consideration is significantly below the target price set by at least four different analysts, including a target price of $93.00 set by an analyst at First Analysis Corp. on March 4, 2014, and a target price of $90.00 set by an analyst at Credit Suisse on May 27, 2014.
On May 7, 2014, Rockwood released its financial results for the company’s first quarter 2014, reporting strong results for the quarter. Specifically, the company reported first quarter adjusted net income from continuing operations of $32.2 million, or $0.43 per share, compared to $23.1 million, or $0.29 per share, for the same quarter 2013. Rockwood also reported net sales on continuing operations of $354.5 million compared to $337.1, an increase of 5.2% compared to the same quarter 2013.
In announcing the quarterly results, Rockwood’s Chairman and CEO, “Seifi Ghasemi, Chairman and Chief Executive Officer, stated, “Our core businesses (Surface Treatment and Lithium applications, which excludes potash) delivered strong performance in the first quarter…. We remain on track for executing on our strategic objectives. We expect to use approximately $500 million of cash on hand to close on the acquisition of a 49% interest in Talison Lithium during the second quarter. In addition, we expect to support our current share repurchase and dividend programs.”
In light of these facts, Robbins LLP is examining Rockwood’s board of directors’ decision to merge the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Rockwood shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Rockwood shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.