In a deal aimed at tapping fast-growing demand for lithium products such as batteries, US fine chemical producer Albemarle, headquartered at Baton Rouge, Louisiana, has announced plans to buy compatriot Rockwood Holdings for $6.2 billion.

Shareholders of Rockwood, which is based in Princeton, New Jersey, will receive $50.65 in cash and 0.4803 Albemarle shares for each share they own. Albemarle said it has secured financing of $3.7 billion from BofA Merrill Lynch to fund the cash portion of the transaction set to close in the first quarter of 2015.

The Louisiana company expects the acquisition to result in some $100 million in annual savings by 2016 by eliminating duplicate costs, through increased buying power and the operational economies of scale. It also is expected to increase cash earnings per share in the first year and allow debt reduction.

Rockwood is one of four companies - including Talison, FMC Corp. and SQM - that control about 90% of the market for lithium. Demand for the metal will grow up to three times faster than the overall economy, Albemarle's CEO Luke Kissam told an investor presentation.

The merged chemical producer, of which Albemarle shareholders will hold 70%, Rockwood shareholders 30%, will have a strong presence across several high-margin lithium businesses. It will supply catalysts to refineries, bromine for use in offshore drilling and emission control and surface treatment products to the automobile and aerospace industries.

"All four of the combined company's businesses have high margins, strong competitive positions, and attractive long-term growth," Kissam said. Lithium and Albemarle's bromine business, catalysts and surface treatment have similar technologies that will help drive additional growth, he noted.

With the Rockwood takeover, Albemarle will also gain access to raw materials assets in Chile's Atacama Desert.

Under former chief executive Seifi Ghasemi, who moved to Air Products & Chemicals as chairman and CEO on July 1, Rockwood sold its rheology business to German chemical producer Altana and agreed to sell its titanium-dioxide businesses to Huntsman, both moves designed to sharpen the focus on lithium and metal surface treatments. EU competition authorities are still investigating the latter deal, but Rockwell said the outcome will not influence the merger plans.

"Growth prospects for lithium are better than for any of Albemarle's existing businesses," Suntrust Robinson Humphrey analyst James Sheehan told the news agency Reuters. "They want to capture the upside potential from electrification of automobiles that's likely to occur over the next several years," he added.

US sales of electric vehicles soared to 167,617 in 2013 from 345 in 2010, according to a report published in January by the Department of Transportation-funded Electric Vehicle Transportation Center.