Merck Signs Agreement to Buy Versum Materials for $6.5B

German life science and pharmaceuticals firm Merck KGaA entered into a definitive agreement to purchase American specialty materials firm Versum Materials Inc. for an enterprise value of €5.8 billion, or about $6.5 billion.

Versum Materials, based in Tempe, AZ, is a provider of high-purity process chemicals, gases, and equipment for semiconductor manufacturers. According to a joint announcement late last week, the boards of both companies have approved the transaction. 

The acquisition allows Merck to be “optimally positioned to capitalize on long-term growth trends in the elextronic materials industry,” Stefan Oschmann, Merck’s chief executive officer and the chairman of its board, said in a statement. “Our combined business shall deliver leading-edge innovations to our customers around the globe.”

In FY2018, the American company generated $1.4 billion in annual sales. Versum currently operates 15 manufacturing facilities and seven R&D sites across Asia and North America. Once the transaction reaches completion, the business will join Merck’s Performance Materials business sector and remain headquartered in Arizona. 

“The Merck-Versum transaction offers compelling and certain value for our shareholders and will provide long-term benefits for our customers and employees,” said Versum Chairman Seifi Ghasemi in the release. “This exciting business combination will create increased scale, product, and service depth, enhancing global presence, strengthened supply chain, and combined R&D capabilities, driving leading innovation.”

Versum’s board terminated a potential tie-up with Entegris Inc. after receiving a “superior offer” from the German company, according to the joint announcement. The merger with Merck is slated to reach completion in the second half of this year pending the completion of regulatory approvals and other customary closing conditions. 

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