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Merck has tabled an increased counter offer for Versum
Posted on Monday, 15 April 2019 12:47
Versum Materials, the US-based global speciality materials company, has been on the chopping block since January and is now in the middle of a tug of war between Entegris and Merck.

In the latest development of the story, the latter has increased its previously tabled bid of USD 48.00 per item of stock held in the target to USD 53.00 apiece, which significantly trumps the all-share offer the former proposed at the start of the year.

Merck’s new tender values Versum at EUR 5.80 billion, implying an earnings before interest, taxes, depreciation and amortisation (EBITDA) multiple of 13.7x and a pro-forma multiple of 11.6x, including EUR 75.00 million of identified annual run-rate cost synergies.

The target’s board has unanimously determined the new offer is superior and has therefore terminated the merger agreement it had with Entegris in favour of the German healthcare, life science and performance materials business.

Combined, the two companies, their customers and employees will benefit from increased scale, product portfolio innovation and services depth globally.

Merck’s bid values Versum at a premium of 67.5 per cent to the last unaffected close of USD 31.65 on 25th January 2019.

Shares in the group, billed as one of the world’s leading suppliers of high-purity process chemicals, gases and equipment for semiconductor manufacturing, closed up slightly at USD 52.00 following the announcement on 12th April 2019, valuing the company at USD 5.68 billion.

Versum has around 2,300 employees, 15 manufacturing and seven research and development facilities across Asia and North America, with reported sales of EUR 1.20 billion and adjusted EBITDA margins of 33.0 per cent in 2018.

Merck, according to Reuters, is making a bet that the electronic materials markets for semiconductor firms will recover and boost the share of profit that it gains from high-technology chemicals from 19.0 per cent to 27.0 per cent.

The deal will be funded using cash on hand and debt by way of a facilities agreement with Bank of America Merrill Lynch, BNP Paribas Fortis and Deutsche Bank.

Closing is subject to stockholder and regulatory approvals and is expected in the second half of 2019.

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