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
TEMPE, Ariz. & BILLERICA, Mass.--(BUSINESS WIRE)--Mar. 8, 2019--
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 hasalready
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
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Bertrand Loy
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Chairman of the Versum Board of Directors
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President and CEO, Entegris
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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/
Source: Entegris, Inc.
Entegris
Bill Seymour
VP of Investor Relations
952-556-1844
bill.seymour@entegris.com
Or
Michael
Freitag / Kelly Sullivan
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
Versum
Materials Contacts
Soohwan Kim, CFA
Head of Investor
Relations
602-282-0957
Soohwan.Kim@versummaterials.com
Or
Tiffany
Elle
Global Communications
480-282-6475
Tiffany.Elle@versummaterials.com
Or
Meghan
Gavigan / Emily Claffey / Julie Rudnick
Sard Verbinnen & Co
212-687-8080