By Dana Mattioli 

Versum Materials Inc. said it plans to combine with Entegris Inc. in a merger that unites two chemical companies that make critical components for the semiconductor industry.

Versum and Entegris announced Monday a stock-for-stock merger in which Versum stockholders will receive 1.120 shares of Entegris for each existing Versum share. Upon completion of the merger, Entegris stockholders will own 52.5% of the combined company, and Versum stockholders 47.5%.

The combined company, which will have a market value of nearly $8 billion based on Friday's closing prices, will supply products for purifying, protecting and transporting materials used in the manufacturing process in the semiconductor and other high-tech industries.

The company will retain the Entegris name and will be headquartered in Billerica, Mass., with a strong operational presence in Tempe, Arizona.

The Wall Street Journal reported news of the merger Sunday evening.

Entegris, with a market value of $4.4 billion, is no stranger to deal making. 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. It now has about 3,500 employees.

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

Entegris Chief Executive Bertrand Loy will serve as CEO of the new company, with Entegris Chief Financial Officer Greg Graves as CFO. Mr. Loy became part of Entegris in 2005 as part of its merger with Mykrolis. Versum Materials general counsel Michael Valente will serve as general counsel of the combined company. 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 adds 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 07:12 ET (12:12 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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