Reiterates Powerful Value-Creation Potential
and Compelling Strategic Benefits of Merger of Equals
Announces Additional $50 million in Cost
Synergies Expected for Total of More than $125 million and
Significant Revenue Synergy Upside
Significant Balance Sheet Flexibility for
Return of Capital
Committed to Maintaining a Significant Presence
in Tempe, Arizona with Opportunities for the Combined Employee
Base
Versum Materials, Inc. (NYSE:VSM), a leading specialty materials
supplier to the semiconductor industry, and Entegris, Inc.
(NASDAQ:ENTG), a leader in specialty chemicals and advanced
materials solutions for the microelectronics industry, today issued
the following letter to Versum and Entegris shareholders
reiterating the powerful value-creation potential and compelling
strategic benefits of the previously announced merger of
equals:
March 8, 2019
Dear Versum and Entegris Shareholders:
We are writing to you on behalf of the Versum Materials and
Entegris management teams and Boards of Directors regarding the
merger of equals between our two companies we announced on January
28, 2019. We believe it is important to set the record straight
about the compelling strategic benefits the combined company will
have as a premier specialty materials company and reiterate our
confidence in the significant shareholder value we will deliver as
one company. Key points are as follows:
- The Entegris-Versum transaction is a
true, all-stock, remain-invested, merger of equals that has
tremendous upside value-creation potential. In a combination
with Entegris, Versum shareholders will achieve significant value
creation from the strength of the combined company, outsized
revenue growth and cash flow generation, and enhanced capital
returns. Given the leadership position the combined company will
hold in the semiconductor and specialty chemicals industry, the
combined company will retain the ability to pursue a full range of
additional value-creating strategic options going forward.
- There is significant cost, revenue
and tax synergy potential within the proposed combination of
Entegris and Versum. The integration teams of both companies
have worked closely over the past month, and as a result of those
detailed efforts, the combined company now expects to achieve more
than $125 million in cost synergies from SG&A, such as
facilities optimization, administrative functions and
rationalization of public company costs, as well as efficiencies in
commercial operations, manufacturing, logistics and procurement.
Given the strength of the two companies, the enhanced offerings and
the positive receptivity from customers, over the next three years
we also expect revenue synergies to contribute at least $50 million
of additional EBITDA annually. Revenue synergies will result
initially from cross-selling across major customers and geographies
and eventually through the opportunity to develop co-optimized
products and solutions. In addition, the combination is expected to
generate tax synergies reflecting the combined company’s ability to
benefit from Entegris’ more efficient tax structure.
- The combined company will have a
strong balance sheet and will generate significant excess free cash
flow that will provide the flexibility necessary to allow for
significant return of capital to shareholders, among other
initiatives. We expect the combined company to have significant
debt capacity with gross leverage at closing of only approximately
1.7x.
- Importantly, both companies have
experienced management teams with strong track records of
successfully integrating mergers, achieving synergies and creating
shareholder value. At Entegris, Bertrand Loy has led the
successful integration of multiple acquisitions, including
Mykrolis, POCO Graphite, and ATMI. Seifi Ghasemi has a proven track
record of delivering shareholder value at multiple companies,
including Rockwood Holdings and Air Products. We are confident the
combined company will meet or exceed the newly stated cost synergy
goals as well as realize the other benefits of this merger.
- The combined company will deliver
unique opportunity for all stakeholders. Together Entegris and
Versum will be able to provide an end-to-end portfolio of solutions
for the entire semiconductor process and as such, customers will
benefit from enhanced product breadth and depth, unwavering
commitment to R&D, improved technical expertise as well as a
much broader global scale. With the most talented team in the
industry we will be able to achieve faster time to solutions and
better meet the needs of our customers. With a truly equal
combination of the Board of Directors and management team of both
Entegris and Versum, the combined company will be the ideal
home for Versum’s employees. In fact, the combined company has
already committed to creating opportunities for employees of the
combined company and will maintain a strong operational presence in
Tempe, Arizona – reinforcing that this transaction is a true merger
of equals.
We remain committed to our strategic merger. As we have outlined
above, we are confident that it is a highly complementary and
strategically compelling transaction that will offer substantial
value to shareholders of both companies through the attractive
growth profile, potential for capital deployment, a diversified
portfolio and enhanced scale.
Sincerely,
Seifi Ghasemi Bertrand Loy Chairman of the
Versum Board of Directors President and CEO, Entegris
Advisors
Morgan Stanley & Co. LLC is serving as exclusive financial
advisor to Entegris and Wachtell, Lipton, Rosen & Katz is
serving as legal counsel. Lazard is serving as financial advisor to
Versum Materials and Simpson Thacher & Bartlett LLP is serving
as legal counsel.
About Entegris
Entegris is a leader in specialty chemicals and advanced
materials solutions for the microelectronics industry and other
high-tech industries. Entegris is ISO 9001 certified and
has manufacturing, customer service and/or research facilities
in the United
States, China, France, Germany, Israel, Japan, Malaysia, Singapore, South
Korea and Taiwan. Additional information can be found
at www.entegris.com.
About Versum Materials
Versum Materials, Inc. (NYSE:VSM) is a leading global specialty
materials company providing high-purity chemicals and gases,
delivery systems, services and materials expertise to meet the
evolving needs of the global semiconductor and display industries.
Derived from the Latin word for "toward," the name "Versum"
communicates the company's deep commitment to helping customers
move toward the future by collaborating, innovating and creating
cutting-edge solutions.
A global leader in technology, quality, safety and reliability,
Versum Materials is one of the world's leading suppliers of
next-generation CMP slurries, ultra-thin dielectric and metal film
precursors, formulated cleans and etching products, and delivery
equipment that has revolutionized the semiconductor industry.
Versum Materials reported fiscal year 2018 annual sales of about
U.S. $1.4 billion, has approximately 2,300 employees and operates
14 major facilities in Asia and the North America. It is
headquartered in Tempe, Arizona. Versum Materials had operated for
more than three decades as a division of Air Products and
Chemicals, Inc. (NYSE:APD).
For additional information, please visit
http://www.versummaterials.com.
Forward Looking Statements
This communication contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that are subject to risks and uncertainties and are made pursuant
to the safe harbor provisions of Section 27A of the Securities
Act of 1993, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. Where a forward-looking statement
expresses or implies an expectation or belief as to future events
or results, such expectation or belief is expressed in good faith
and believed to have a reasonable basis. The words “believe”
“continue,” “could,” “expect,” “anticipate,” “intends,” “estimate,”
“forecast,” “project,” “should,” “may,” “will,” “would” or the
negative thereof and similar expressions are intended to identify
such forward-looking statements.
These forward-looking statements are only predictions and
involve known and unknown risks and uncertainties, many of which
are beyond Entegris’ and Versum Materials’ control. Statements in
this communication regarding Entegris, Versum Materials and the
combined company that are forward-looking, including projections as
to the anticipated benefits of the proposed transaction, the impact
of the proposed transaction on Entegris’ and Versum Materials’
business and future financial and operating results, the amount and
timing of synergies from the proposed transaction, and the closing
date for the proposed transaction, are based on management’s
estimates, assumptions and projections, and are subject to
significant uncertainties and other factors, many of which are
beyond Entegris’ and Versum Materials’ control. These factors and
risks include, but are not limited to, (i) weakening of global
and/or regional economic conditions, generally or specifically in
the semiconductor industry, which could decrease the demand for
Entegris’ and Versum Materials’ products and solutions;
(ii) the ability to meet rapid demand shifts; (iii) the
ability to continue technological innovation and introduce new
products to meet customers’ rapidly changing requirements;
(iv) the concentrated customer base; (v) the ability to
identify, effect and integrate acquisitions, joint ventures or
other transactions; (vi) the ability to protect and enforce
intellectual property rights; (vii) operational, political and
legal risks of Entegris’ and Versum Materials’ international
operations; (viii) Entegris’ dependence on sole source and
limited source suppliers; (ix) the increasing complexity of
certain manufacturing processes; (x) raw material shortages
and price increases; (xi) changes in government regulations of
the countries in which Entegris and Versum Materials operate;
(xii) the fluctuation of currency exchange rates;
(xiii) fluctuations in the market price of Entegris’ stock;
(xiv) the level of, and obligations associated with, Entegris’
and Versum Materials’ indebtedness; and (xv) other risk
factors and additional information. In addition, material risks
that could cause actual results to differ from forward-looking
statements include: the inherent uncertainty associated with
financial or other projections; the prompt and effective
integration of Entegris’ businesses and the ability to achieve the
anticipated synergies and value-creation contemplated by the
proposed transaction; the risk associated with Entegris’ and Versum
Materials’ ability to obtain the approval of the proposed
transaction by their shareholders required to consummate the
proposed transaction and the timing of the closing of the proposed
transaction, including the risk that the conditions to the
transaction are not satisfied on a timely basis or at all and the
failure of the transaction to close for any other reason; the risk
that a consent or authorization that may be required for the
proposed transaction is not obtained or is obtained subject to
conditions that are not anticipated; unanticipated difficulties or
expenditures relating to the transaction, the response of business
partners and retention as a result of the announcement and pendency
of the transaction; and the diversion of management time on
transaction-related issues. For a more detailed discussion of such
risks and other factors, see Entegris’ and Versum Materials’
filings with the Securities and Exchange Commission, including
under the heading “Risks Factors” in Item 1A of Entegris’ Annual
Report on Form 10-K for the fiscal year ended
December 31, 2018, filed on February 11, 2019, and Versum
Materials’ Annual Report on Form 10-K for the fiscal year
ended September 30, 2018, filed on November 21, 2018 and
in other periodic filings, available on the SEC website or
www.entegris.com or www.versummaterials.com. Entegris and Versum
Materials’ assume no obligation to update any forward-looking
statements or information, which speak as of their respective
dates, to reflect events or circumstances after the date of this
communication, or to reflect the occurrence of unanticipated
events, except as may be required under applicable securities laws.
Investors should not assume that any lack of update to a previously
issued “forward-looking statement” constitutes a reaffirmation of
that statement.
Additional Information about the Merger and Where to Find
It
This communication does not constitute an offer to buy or sell
or the solicitation of an offer to buy or sell any securities or a
solicitation of any vote or approval. This communication relates to
a proposed business combination between Entegris and Versum
Materials. In connection with the proposed transaction, Entegris
has filed a registration statement on Form S-4, which included a
preliminary joint proxy statement of Entegris and Versum Materials
that also constitutes a preliminary prospectus of Entegris. These
materials have not yet become effective, are not yet final and may
be amended. After the registration is declared effective by the
Securities and Exchange Commission (the “SEC”), a definitive joint
proxy statement/prospectus will be mailed to stockholders of
Entegris and stockholders of Versum Materials. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT,
JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED OR THAT
WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE
THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. Investors and security holders will be able
to obtain free copies of these documents and other documents
containing important information about Entegris and Versum
Materials filed with the SEC through the website maintained by the
SEC at http://www.sec.gov. Copies of the documents filed with the
SEC by Entegris will be available free of charge on Entegris’
website at http://www.entegris.com or by contacting Entegris’
Investor Relations Department by email at irelations@entegris.com
or by phone at 978-436-6500. Copies of the documents
filed with the SEC by Versum Materials will be available free of
charge on Versum Materials’ website at
investors.versummaterials.com or by phone at 484-275-5907.
Participants in the Solicitation
Entegris, Versum Materials and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies in respect of the proposed
transaction. Information about the directors and executive officers
of Entegris is set forth in Entegris’ proxy statement for its 2018
annual meeting of shareholders, which was filed with the SEC on
March 28, 2018, and Entegris’ Annual Report on
Form 10-K for the fiscal year ended December 31,
2018, which was filed with the SEC on February 11, 2019.
Information about the directors and executive officers of Versum
Materials is set forth in its proxy statement for its 2019 annual
meeting of shareholders, which was filed with the SEC on
December 20, 2018, and Versum Materials’ Annual Report on
Form 10-K for the fiscal year ended September 30,
2018, which was filed with the SEC on November 21, 2018. Other
information regarding the participants in the proxy solicitations
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint
proxy statement/prospectus and other relevant materials to be filed
with the SEC regarding the proposed transaction when such materials
become available. Investors should read the joint proxy
statement/prospectus carefully when it becomes available before
making any voting or investment decisions. You may obtain free
copies of these documents from Entegris or Versum Materials using
the sources indicated above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190308005224/en/
EntegrisBill SeymourVP of Investor
Relations952-556-1844bill.seymour@entegris.comOrMichael Freitag /
Kelly SullivanJoele Frank, Wilkinson Brimmer
Katcher212-355-4449Versum Materials ContactsSoohwan Kim,
CFAHead of Investor
Relations602-282-0957Soohwan.Kim@versummaterials.comOrTiffany
ElleGlobal
Communications480-282-6475Tiffany.Elle@versummaterials.comOrMeghan
Gavigan / Emily Claffey / Julie RudnickSard Verbinnen &
Co212-687-8080
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