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By: Maddy Ozer | meo14@psu.edu | January 29, 2019
Versum Materials Inc. (VSM) has confirmed the acquisition of Entegris Inc. (ENTG), as of January 28, 2019. This all stock deal unites two chemical companies that make critical components for the semiconductor industry. The deal works as followed: Shareholders of Versum (VSM) stock will receive 1.120 shares of Entegris (ENTG) for each existing share. Upon completion of the merger, Entegris (ENTG) stockholders will own 52.5% of the combined company, and Versum (VSM) stockholders 47.5%. The news boosted VSM shares by 7.28%, rising from $34.18 to $36.65 by days close. Additionally, investors in Entegris (ENTG) reacted positively to the news of the deal as indicated by the 7.07% increase in the share price at the time of the announcement.
With the chemicals industry’s recent consolidation in the latest years, Versum (VSM) took advantage of this opportunity to expand and grow as a company. As competitors, Dow Chemical Co. and DuPont Co. combined into one in 2017 and industrial-gas companies Praxair Inc. and Linde AG also agreed to come together in September of 2018, smaller companies were pressured to either expand their assets or risk losing returns. Additionally, Entegris (ENTG) is no stranger to mergers. The company was founded in 1966 as Fluoroware. Following a merger 20 years ago, it rebranded as Entegris and went public in 2000. Five years later, the company expanded through another merger, this time with Mykrolis Corp. In 2014, Entegris bought electronic-chemicals supplier ATMI Inc.
I feel this deal is beneficial for both companies. With this acquisition, the combined company will have a market value of about $8 billion and will have the ability to produce products unlike their competitors. This merger will create the world’s first comprehensive and effective end-to-end materials solutions provider across the entire semiconductor manufacturing process. This unique ability will better enable the company to support future investments in technology and infrastructure, as well as provide expanded opportunities for their employees. According to analysts, the company should be able to generate about $3 billion over the next year, proving to be a very good sign for the success of the acquisition.
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