Semiconductor materials supplier Entegris Inc said on Wednesday it would buy smaller rival CMC Materials in a $6.5 billion deal as it seeks to mass-manufacture amid an unprecedented global chip shortage.
Semiconductor-related businesses are consolidating, with companies looking extensively to invest in R&D and manufacturing to meet growing demand.
CMC shareholders will receive $133.00 in cash and 0.4506 shares of Entegris common stock for each share they own. Based on Reuters calculations, the cash-and-stock portion of the offer is valued at $197.36 per share, or $5.61 billion, a 35% premium to CMC’s Tuesday close.
CMC shares rose 33 per cent on Wednesday. Shares of Entegris initially posted a decline of about 6%, but made up most of the losses by the close of trading.
“This deal will enhance Entegris’ portfolio, making them a one-stop shop in the semiconductor materials space,” Citigroup analysts wrote in a note.
Entegris said it does not believe the deal will raise antitrust concerns during regulatory review in several countries, including China.
Entegris, based in Billerica, Massachusetts, supplies materials to major chip manufacturers including Taiwan Semiconductor Manufacturing and Samsung. Its stock has nearly tripled since the start of 2020 and the company is looking for M&A opportunities.
The deal will be financed with a combination of shares issued to CMC Materials, new debt and cash on hand, the companies said in a joint statement, adding that Entegris had obtained fully committed debt financing from Morgan Stanley Senior Funding Inc. They expect to close the deal in the second half of 2022.
Morgan Stanley & Company LLC was Entegris’ financial advisor and its legal advisors from Schaden, Arps, Slate, Meagher & LLP. Goldman Sachs & Company LLC acted as financial advisor to CMC and Wachtel, Lipton, Rosen & Katz were its legal advisors.
read all breaking news, today’s fresh news And coronavirus news Here.