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Mergers & Acquisitions

Merck KGaA wants to break up Versum-Entegris merger

German firm steps in with what it says is a better offer for Versum

by Michael McCoy
February 28, 2019 | APPEARED IN VOLUME 97, ISSUE 9

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Credit: Merck KGaA
Inorganic chemical manufacturing at Merck KGaA's headquarters site in Darmstadt, Germany.

Germany’s Merck KGaA is seeking to break up the merger of the electronic materials suppliers Versum Materials and Entegris with an offer to acquire Versum for $48 per share in cash, or about $6 billion including Versum’s debt.

Announcedin late January, the deal between Versum and Entegris is an all-stock “merger of equals” intended to create a $3 billion-a-year supplier of materials and equipment to the electronics industry. Merck says it is making a superior proposal that will provide Versum shareholders a 52% premium over Versum’s stock price before the Entegris deal was announced and a 16% premium over its more recent stock price.

Versum responds that it continues to believe in the “strategic and financial rationale of the proposed merger of equals with Entegris.” Versum says its board will review Merck’s proposal, but it also adopted an anti-takeover plan.

Versum is a maker of deposition materials, specialty gases, and chemical mechanical planarization (CMP) slurries with sales last year of about $1.4 billion. Both deals would make it part of a larger supplier of materials for semiconductor fabrication, but the product mixes would be different.

Entegris’s product line is mostly filtration, purification, and fluid-management equipment, although it also offers materials. Merck, in contrast, is mostly a materials supplier, with products such as CMP slurries, wafer cleaning and etching chemicals, and lithography materials. Buying Versum, it says, would more than double the size of its semiconductor materials business.

Merck says it is confident it can close the deal in the second half of the year, “assuming expedient engagement by the Versum Board of Directors.”

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