By Dana Mattioli 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 28, 2019).

Versum Materials Inc. is in advanced talks to combine with Entegris Inc., in a deal that would unite two chemical companies that make critical components for the semiconductor industry.

Versum and Entegris are nearing agreement on a stock-for-stock merger that could be announced Monday, according to people familiar with the matter. There is, however, no guarantee the talks won't falter before a final deal is reached.

Should they consummate a deal, it would create a company with a current market value of nearly $8 billion that supplies products for purifying, protecting and transporting materials used in the manufacturing process in the semiconductor and other high-tech industries.

Entegris, with a market value of $4.4 billion and based in Billerica, Mass., is no stranger to dealmaking. The company was founded in 1966 as Fluoroware. Following a merger 20 years ago, it rebranded as Entegris and went public soon thereafter, 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. It now has about 3,500 employees.

Entegris Chief Executive Bertrand Loy is expected to be CEO of the new company. Mr. Loy became part of Entegris in 2005 as part of its merger with Mykrolis.

Versum, based in Tempe, Ariz., was once part of industrial-gas maker Air Products and Chemicals Inc., before it was spun off in 2016. It had a market value of $3.5 billion as of Friday's close.

Under the terms being discussed, Versum shareholders were expected to own about 47.5% of the new company. Versum Chairman Seifollah Ghasemi, who is also chairman and CEO of Air Products, would be chairman of the new entity, the people familiar with the matter said. Entegris is to get five board seats while Versum is expected to have the remaining four.

The development of the "Internet of Things" is providing semiconductor companies with new avenues of growth as more and more items -- from autos to household products -- become "smart." A wave of consolidation has swept the industry in recent years as chip makers seek to better position themselves in the changing landscape, and that could give their suppliers an incentive to gain heft through dealmaking too.

Versum's sales rose 22% to $1.37 billion in the fiscal year ended Sept. 30, while its net income increased slightly to $204.7 million. At Entegris, sales in the nine months ended in September rose 16% from the same period a year earlier to $1.15 billion. Net income jumped 41% to $160 million.

The deal would add to what is shaping up to be another busy year for mergers, despite stock-market volatility and political uncertainty. Earlier this month, pharmaceutical maker Bristol-Myers Squibb Co. agreed to buy Celgene Corp. for $74 billion and financial-technology company Fiserv Inc. agreed to purchase First Data Corp. for $22 billion.

The chemicals industry also has been busy consolidating in recent years, with Dow Chemical Co. and DuPont Co. combining and industrial-gas companies Praxair Inc. and Linde AG also agreeing to come together.

Write to Dana Mattioli at dana.mattioli@wsj.com

 

(END) Dow Jones Newswires

January 28, 2019 02:47 ET (07:47 GMT)

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