Entegris Inc. and Mykrolis Corp. said that they have signed a definitive agreement for what they called a "merger of equals" transaction worth approximately $1.3 billion.
Entegris, based in Chaska, Minn., bills itself as a materials integrity management company and serves the semiconductor industry as well as the data storage, chemical processing, biopharmaceutical, medical device. In the chip industry Entegris provides products and services related to wafer handling and shipping, finished wafer shipping, reticle handling, bare die shipping and handling, packaged device shipping and handling, ultrapure and corrosive chemical/fluid storage, transport, sensing and control.
Mykrolis, based in Billerica, Mass., specializes in the transport and purification of liquids and gases used in chip process technology; its line of equipment comprises systems for dispensing photochemicals and other coatings as well as a variety of other components used in the delivery of gases to the process tool It also serves the flat panel displays, fiber optics, solar cells, optical disks and data storage devices.
The combined company, which will be known as Entegris Inc. and be based in Chaska, will still have significant operations in Billerica, the companies said. The new Entegris will have combined trailing annual sales of more than $650 million, according to the companies. The combined entity will also have trailing annual operating income of approximately $75 million and a strong balance sheet, including approximately $284 million of cash and marketable securities, they said.
Entegris has approximately 1,800 permanent employees around the globe currently; Mykrolis approximately 900. During the past 12 months, 63 percent of Entegris' sales were outside North America, compared with 74 percent for Mykrolis; Japan and the rest of Asia made up 48 percent of Entegris sales and 64 percent of Mykrolis sales.
Entegris and Mykrolis have identified approximately $15 million in annual cost savings, to be achieved principally through the rationalization of duplicative administrative functions and facilities, the companies said. The merger will affect approximately 5 percent of the combined company's workforce; necessary staff reductions will be achieved through normal attrition wherever possible, according to the companies.
Under the terms of the agreement, which was unanimously approved by the boards of both companies, Entegris and Mykrolis will merge in a stock-for-stock exchange, tax-free for the shareholders of both companies, in which Mykrolis shareholders will receive 1.39 shares of Entegris common stock for every share of Mykrolis common stock they hold.
The transaction value is based on the exchange ratio, the closing stock prices of Entegris and Mykrolis on their respective listing exchanges on March 18, 2005, and the approximately 74 million and 42 million primary shares of Entegris and Mykrolis, respectively, currently outstanding, the companies said. Upon completion of the transaction, which the companies anticipate in Q3, current Entegris shareholders will own approximately 56 percent of the combined enterprise and current Mykrolis shareholders will own approximately 44 percent.
The companies expect the transaction to be earnings-neutral in the second half of 2005, excluding non-cash purchase accounting adjustments, and accretive by approximately 8 cents per share of the combined company in calendar year 2006, again excluding non-cash purchase accounting adjustments. That figure also includes the $15 million in identified cost savings from the combination, the companies said.
Upon completion of the deal, the new Entegris will be headed by Gideon Argov, currently CEO of Mykrolis, as CEO, with James E. Dauwalter, currently CEO of Entegris, serving as a non-executive chairman of the board of directors; Jean-Marc Pandraud, currently president and COO of Mykrolis, serving as VP and COO; Michael W. Wright, currently president and COO of Entegris, serving as VP and chief marketing officer; John Villas, currently CFO of Entegris, serving as CFO; and Bertrand Loy, currently Mykrolis' CFO, serving as VP and chief integration officer.
The new Entegris board will consist of eleven directors, including five from the current Entegris board, five from the Mykrolis board, and one independent director chosen by the combined board after the merger.
Completion of the transaction is subject to the approval of Mykrolis and Entegris shareholders, expiration or early termination of the applicable Hart-Scott-Rodino waiting period, and customary closing conditions, the company said. They expect that the combined company will trade on the Nasdaq under Entegris' current symbol, ENTG.
