Entegris to acquire CMC Materials in a cash and stock transaction worth $6.5B

Dec. 15, 2021 7:48 AM ETEntegris, Inc. (ENTG), CCMPBy: Khyathi Dalal, SA News Editor1 Comment

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  • Entegris (NASDAQ:ENTG) and CMC Materials (NASDAQ:CCMP) announced a definitive merger agreement wherein the former will acquire the latter in a cash and stock transaction with an enterprise value of ~$6.5B.
  • Under agreement terms, CMC Materials shareholders will receive $133 in cash and 0.4506 shares of Entegris common stock for each share of CMC Materials common stock they own.
  • The total per share consideration represents a 35% premium over CMC Materials’ closing price on Dec.14 and a 38% premium to the 10-day volume weighted average share price.
  • On transaction completion, Entegris shareholders will own ~91% of the combined company and CMC Materials shareholders will own the remaining.
  • "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," president & CEO Bertrand Loy commented.
  • The expanded portfolio will increase Entegris’ growing served markets in semiconductor applications to ~$12B as well as its content per wafer opportunity, and it will increase Entegris’ unit-driven revenue from 70% to ~80%.
  • The transaction is expected to be significantly accretive to non-GAAP EPS within the first year post-closing; Entegris expects to realize $75M in run-rate cost synergies and $40M in CapEx synergies within 12 to 18 months from transaction closure.
  • The company is targeting pro forma adjusted gross leverage of ~4x at closing; with ~$1.1B in adj. EBITDA on a pro forma LTM basis including synergies, Entegris will be well positioned to rapidly reduce its leverage to less than 3.0x.
  • The transaction is to be financed with a combination of equity issued to CMC Materials, new debt and cash on hand.
  • The transaction is expected to close in 2H22.
  • In last week of October, Entegris acquired Precision Microchemicals business of BASF for $90M.
  • With a Bullish rating, SA Contributor recently wrote that Entegris is an excellent growth stock to own for the long term.
  • ENTG trades 5.1% down premarket
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