Entegris Inc. (Billerica, Mass.) has offered $1.15 billion to acquire ATMI Inc. (Danbury, Conn.) in a consolidation that would merge two leading suppliers of chemical equipment and materials to the semiconductor industry. ATMI announced in November 2013 that it was exploring strategic alternatives for the company.
The deal equates to $850 million net of cash acquired, which will include the cash proceeds from the sale of ATMI's LifeSciences business of $170 million. The Entegris acquisition is conditional on the sale of the LifeSciences business, which is expected in the first quarter of 2014.
The offer of $34 per ATMI share has been agreed unanimously by both boards of directors but at least nine US based legal firms said they were preparing to investigate whether shareholders in ATMI were being unfairly treated by the board. The key question is whether the price agreed undervalues ATMI, and whether by agreeing to it, the board of directors of ATMI has violated its fiduciary duty. The deal will be subject to ATMI shareholder approval.
While proposals of class-action lawsuits immediately after the announcement of a take over are not uncommon, to have so many law firms vying to engage with shareholders is unusual.
Under the terms of the merger agreement, ATMI shareholders will receive $34.00 in cash for each share of ATMI common stock they hold at the time of closing, which is expected to be some time in the second quarter of 2014. The price represents a premium of 26.3 percent to ATMI's closing price of $26.93 on Feb. 3, 2014. Entegris expects to fund the all-cash transaction with a combination of existing cash balances and already committed debt financing. The transaction is expected to yield approximately $30 million in annualized cost synergies.
The take over would create a technology leader in advanced process materials, contamination control and wafer handling, Entegris said.
The deal was announced at the same time as both companies announced their 4Q13 financial results. In the fourth quarter Entegris made a net income of $23.1 million from revenue of $186.3 million. For the full year Entergis reported a net income of $77 million on sales of $693 million. ATMI reported $3.8 million profit on quarterly revenue of $94.8 million. For the full year ATMI made a net income of $30 million from sales of $361 million.
Bertrand Loy, CEO of Entegris said that ATMI and Entegris are an excellent fit with each other. "We are excited about the opportunities ahead and look forward to quickly realizing the significant benefits of this transaction for our shareholders, customers and employees," he added.
ATMI CEO Doug Neugold, said: "Entegris' global platform and complementary products represents a great opportunity for ATMI stakeholders, including our shareholders, who will receive an immediate premium for their investment."
Nonetheless some of the legal teams postulated that the $34 per share value was lower than some previously expressed opinions and that the 26.3 premium it represents is lower than comparable deals over the last three years.
The transaction is subject to regulatory approvals of both U.S. and international regulators as well as approval by ATMI shareholders.
The deal also follows the announcement of the merger of Applied Materials Inc. and Tokyo Electron Ltd. in September 2013. That proposed merger, albeit of two companies that have competed primarily in the etch and deposition steps in chip making, has highlighted how a slow down in the number of wafer fabs getting built has created challenging economic environment for suppliers of semiconductor production equipment and related services.
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