New Team-Up Forges a Comprehensive Electronic Materials Platform

Source: Streetwise Reports   12/15/2021

CMC Materials Inc. shares traded 33% higher after the semiconductor materials company reported it agreed to be acquired by Entegris Inc. in a combination cash and stock deal valued at approximately $6.5 billion.

Global semiconductor materials company CMC Materials Inc. (CCMP:NASDAQ), which supplies consumable materials to semiconductor manufacturers and pipeline operators, today announced it has entered into a definitive agreement to be acquired by Entegris Inc. (ENTG:NASDAQ) in a combination cash and stock deal for an enterprise value of around $6.5 billion.

The companies claimed that the merger will bring together CMC Materials’ chemical mechanical planarization (CMP) “polishing” materials, knowledge base, and technology with Entegris’ world-class solutions set in order to create a vast electronic materials platform.

The merger agreement stipulates that, “CMC Materials shareholders will receive $133.00 in cash and 0.4506 shares of Entegris common stock for each share of CMC Materials common stock they own.”

The report stated that the offering price including the shares in Entegris represent a 35% increase over CMC Materials’ closing stock price on December 14, 2021. It is expected that when the transaction is finalized, Entegris shareholders will own about 91% of the combined company with existing CMC Materials shareholders owning the remaining 9%.

Entegris’ President and CEO Bertrand Loy stated, “Acquiring CMC Materials will further differentiate our unit-driven platform and advance our ability to provide a broad range of process solutions for our customers, at a faster time-to-solution.

The highly complementary combined portfolio creates the industry’s most comprehensive and innovative end-to-end electronic materials offering, as well as significantly expands our growing served market and content per wafer opportunity…We believe the acquisition will allow us to unlock significant growth through enhanced innovation, scale and execution.”

CMC Materials’ President and CEO David Li commented, “We are excited to be joining forces with Entegris. The combination provides immediate and substantial value to CMC Materials shareholders and provides meaningful participation in the long-term growth opportunities created by the transaction…CMC Materials and Entegris share highly complementary businesses and capabilities grounded in world-class innovation and customer collaboration.”

Entegris believes that the merger offers many compelling strategic and financial benefits. Specifically, the firms newly combined CMP portfolio will significantly expand markets served and offer clients a comprehensive and innovative offering of product options and operating capabilities, in the chip fabrication environment throughout the supply chain allowing Entegris to add CMC’s slurries and pads to its full end-to-end suite of CMP solutions. The combined technical knowledge will also aid in accelerating R&D efforts to meet growing demand from customers for quicker and more complex device architectures.

The report mentioned that the transaction is expected to be highly accretive to Entegris’ non-GAAP EPS. The firm anticipates that within the first year from closing, “it will realize $75 million in run-rate cost synergies and $40 million in CapEx synergies within 12 -18 months from the closing of the transaction.”

The companies advised that the transaction is expected to close in H2/22, subject to approval by CMC Materials shareholders, ordinary closing conditions and regulatory approval.

Entegris is headquartered in Billerica, Mass. and is large global supplier of advanced materials and process solutions for the semiconductor and high-technology industries. The company has a market cap of nearly US$20 billion and employs around 6,600 people in the U.S., Canada, France, Germany, Israel several Asian countries.

CMC Materials is global supplier of consumable electronic materials used primarily by semiconductor manufacturers. The company’s products are key components used in production of advanced semiconductor (IC chip) devices which enable its customers to manufacture more complex, smaller and faster devices. Additionally, the firm sells high-performance materials to pipeline operators. The company is based in Aurora, Ill. and employs about 2,200 worldwide.

CMC Materials began the day with a market capitalization of around $4.1 billion with approximately 28.42 million shares outstanding and a short interest of about 1.8%. CCMP shares opened 26% higher today at $183.9771 (+$38.0071, +26.04%) over yesterday’s $145.97 closing price. The stock has traded today between $182.37 and $194.54 per share and is currently trading at $194.35 (+$48.38, +33.14%).

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