Specialty chemicals producer Rockwood Holdings agreed to buy Talison Lithium for C$724 million ($729 million) to boost its output of lithium used in batteries and smartphones.

Demand for lithium batteries has risen in recent years as they are more efficient and help cut carbon emissions. The rising popularity of smartphones has also helped drive up prices of the metal.

Rockwood, whose peers include Kronos Worldwide, Sensient Technologies, WR Grace and Co and Valhi, has said it expects battery-grade lithium products to show double-digit sales growth this year.

Lithium business accounted for 14% of Rockwood's June quarter sales of $905.6 million.

Talison Lithium exports over 350,000 tons of lithium products annually, according to the company's website.

The company's Greenbushes operations in Western Australia has been producing lithium for over 25 years.

Rockwood said on Thursday it will pay C$6.50 per Talison share - a 53% premium to the stock's Wednesday close on the Toronto Stock Exchange.

Rockwood said it plans to finance the acquisition using cash on hand and new debt financing.

Lazard advised Rockwood while Macquarie Capital in Australia and Canada are acting as financial advisers to Talison.