$724,000,000 All Cash Acquisition of Talison Lithium by Rockwood

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$724,000,000 All Cash Acquisition of Talison Lithium by Rockwood

Talison Lithium Limited (TSX:TLH | US: TLTHF) announced today “that it has entered into a definitive Scheme Implementation Agreement (“SIA”) with Rockwood Holdings, Inc. (“Rockwood”) under which it is proposed that Rockwood, or a wholly-owned entity of Rockwood, will acquire 100% of the ordinary shares in the capital of Talison (the “Shares”) by way of a Scheme of Arrangement (“Scheme”) under the Australian Corporations Act 2001 (Cth) for cash consideration of C$6.50 per share. This values the equity of Talison at approximately C$724 million on a fully diluted basis.

The cash consideration of C$6.50 per Share, represents:

• A 53% premium to Talison’s last closing price on August 22, 2012 of C$4.24; 
• A 52% premium to Talison’s 10 day volume weighted average price (“VWAP”) of C$4.28; and 
• A 59% premium to Talison’s 30 day VWAP of C$4.08.

The cash consideration provides an opportunity for Talison Shareholders to realise immediate value for their Shares at a substantial premium to market and reflects the size, strategic nature and growth potential of Talison’s lithium operations.

The SIA entered into by Talison and Rockwood also proposes that Rockwood, or a whollyowned entity of Rockwood, will acquire 100% of the options to acquire Shares (“Options”) through an option scheme of arrangement (“Option Scheme”) for cash consideration of C$6.50 per Option less the exercise price for that Option.

The board of directors of Talison (“Talison Directors”) has considered the Scheme and the Option Scheme and unanimously recommends that Shareholders and Optionholders vote in favour of the Scheme and the Option Scheme, in the absence of a Superior Proposal (as defined in the SIA) and subject to an Independent Expert concluding that the Schemes are in the best interests of security holders. Each of the Talison Directors intends to vote the Shares and Options held or controlled by them in favour of the Scheme and Option Scheme.

Resource Capital Fund IV L.P. and Resource Capital Fund V L.P. (collectively, the “RCF Funds”), together having a 36.8% shareholding interest in Talison, have each confirmed to Talison that, in the absence of an offer which the RCF Funds determine is superior, they support the Scheme and intend to vote all of their Shares in favour of the Scheme.

Peter Robinson, Chairman of the Board of Talison, said, “Today marks a significant milestone in the history of Talison. Under the Scheme, Rockwood is offering cash consideration representing an attractive premium for Shareholders and allowing Shareholders to realise immediate value for their Talison Shares. This reflects positively on Talison’s position in the global lithium market....”

Rockwood is a NYSE-listed global specialty chemicals and advanced materials company.  Rockwood focuses on global niche segments of the specialty chemicals, pigments and additives and advanced materials markets.

The expectation of Talison’s Directors is that Talison, as part of the Rockwood group, will continue to support its existing lithium concentrate customers in China and the rest of the world....

The completion of the Scheme and Option Scheme is subject to minimal conditions including:

• Approval under the Australian Foreign Acquisitions and Takeovers Act 1975 (Cth); 
• Regulatory approvals from the Australian Securities and Investments Commission and the Australian Court; 
• Approval of the requisite majority of Talison Shareholders at a meeting of Shareholders; 
• No Material Adverse Change (as defined in the SIA) occurring to Talison; and 
• No Prescribed Occurrence (as defined in the SIA) occurring in relation to Talison.

Further due diligence is not a condition to completion of the Scheme or the Option Scheme.”

August 23rd, 2012 Talison Lithium Press Release

Johnston-Sequoia Commentary:

To all of our readers who stuck with TLH through the days of the Salares Lithium Inc. - Talison Lithium Merger, the exponential rise from the September 2010 reverse merger IPO, the dark days of late 2011 & early 2012 to this $724,000,000.00 all cash offer by Rockwood - let me be the first to say congratulations.  This is Discovery Investing 101.

I am an advisor of Talison Lithium (and formerly of Salares Lithium) & own shares in the company.  As always, please do your own due diligence.

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