All-Cash Proposal to Acquire Versum

Mer­ck, a sci­ence and tech­nol­o­gy com­pa­ny, today deliv­ered a let­ter to the Board of Direc­tors of Ver­sum Mate­ri­als, Inc. (“Ver­sum”), out­lin­ing the terms of a supe­ri­or pro­pos­al to acquire Ver­sum for $ 48 per share in cash, rep­re­sent­ing a pre­mi­um of 51.7% to the undis­turbed trad­ing price per Ver­sum share on the trad­ing day pri­or to announce­ment of the Ente­gris, Inc. (“Ente­gris”) trans­ac­tion (Jan­u­ary 25, 2019). Merck’s pro­pos­al is there­fore sub­stan­tial­ly supe­ri­or to the Ente­gris transaction.

“We tru­ly believe in the pow­er of a com­bined elec­tron­ic mate­ri­als port­fo­lio of Mer­ck and Ver­sum. Our attrac­tive cash pro­pos­al to Versum’s investors under­lines that we are ful­ly com­mit­ted to com­plet­ing this trans­ac­tion suc­cess­ful­ly”, said Ste­fan Oschmann, Chair­man of the Exec­u­tive Board and CEO of Mer­ck. “It is our clear inten­tion to fur­ther strength­en our oper­a­tions in the U.S. We are proud of our near­ly 130 years of U.S. mar­ket his­to­ry and already more than 10,000 high­ly qual­i­fied employ­ees today work­ing at more than 50 sites coast-to-coast.”

The com­bi­na­tion of Merck’s and Versum’s busi­ness­es would cre­ate a deep and com­ple­men­tary port­fo­lio of elec­tron­ic mate­ri­als, equip­ment and ser­vices for the semi­con­duc­tor and dis­play indus­tries. The com­bined R&D capa­bil­i­ties would enable faster inno­va­tion cycles and strength­en the prod­uct offer­ing to cus­tomers. They would offer increased scale, prod­uct and ser­vice depth, an enhanced glob­al pres­ence and a strength­ened sup­ply chain, which would help dri­ve lead­ing inno­va­tion sup­port­ed by long-term tail­winds in the indus­try. More­over, they would pro­vide an addi­tion­al source for inno­va­tion through lead­ing posi­tions in attrac­tive segments.

All-cash consideration offering attractive premium

Merck’s all-cash pro­pos­al rep­re­sents an attrac­tive pre­mi­um across key benchmarks:

• 51.7 % pre­mi­um to Versum’s undis­turbed share price, on Jan­u­ary 25, 2019, the day pri­or to the Ver­sum-Ente­gris merg­er announcement;
• 15.9 % pre­mi­um to Versum’s cur­rent share price as of Feb­ru­ary 26, 2019

Addi­tion­al­ly, the all-cash pro­pos­al offers Versum’s share­hold­ers cer­tain val­ue, and does not leave them exposed to inte­gra­tion or oth­er post-merg­er risks. With Merck’s strong cred­it rat­ing, the trans­ac­tion will be ful­ly financed and the trans­ac­tion agree­ment will not have a financ­ing contingency.

Commitment to strengthen U.S. operations

Mer­ck has a strong rep­u­ta­tion for inno­va­tion and has demon­strat­ed a robust com­mit­ment to R&D spend­ing and cap­i­tal invest­ment. As the long-term sec­u­lar trends in sci­ence and tech­nol­o­gy con­tin­ue to dri­ve last­ing demand for elec­tron­ic mate­ri­als, the lead­ers will be those will­ing to invest, inno­vate and adapt in this fast-devel­op­ing envi­ron­ment. Mer­ck believes this phi­los­o­phy is con­sis­tent with Versum’s cul­ture and strength of its employ­ees, and as such intends to main­tain Versum’s Tempe, AZ site as the major hub for the com­bined elec­tron­ic mate­ri­als busi­ness in the U.S., com­ple­ment­ing Merck’s already strong com­mit­ment to this impor­tant market.

An opportunity for Versum employees

The firm is a long-term ori­ent­ed, pre­dom­i­nant­ly fam­i­ly-owned sci­ence & tech­nol­o­gy com­pa­ny. “Per­for­mance, Peo­ple & Tech­nol­o­gy” are its three strate­gic pri­or­i­ties. In Merck’s more than 350-year his­to­ry, peo­ple have always been and will con­tin­ue to be at the cen­ter of every­thing it does.

Rge com­pa­ny already has a strong foot­print in the U.S. and a track record as a top employ­er. Over the past decade, the com­pa­ny has invest­ed some $24bn in the U.S. through acqui­si­tions alone, includ­ing the suc­cess­ful acqui­si­tions of Mil­li­pore in 2010 and Sig­ma-Aldrich in 2015.

Ver­sum employ­ees will become an inte­gral part of a lead­ing elec­tron­ic mate­ri­als busi­ness and will ben­e­fit from new and excit­ing devel­op­ment oppor­tu­ni­ties with­in a tru­ly glob­al sci­ence and tech­nol­o­gy company.

Timing

The com­pa­ny is con­fi­dent it can close a trans­ac­tion with Ver­sum in the sec­ond half of 2019, assum­ing expe­di­ent engage­ment by the Ver­sum Board of Direc­tors. Merck’s long track record of com­plet­ing acqui­si­tions, its strong bal­ance sheet and invest­ment-grade cred­it rat­ing posi­tion the com­bined com­pa­ny well for a future of invest­ment and growth. Unlike the Ente­gris trans­ac­tion, the only share­hold­er approval required by Mer­ck­’s pro­pos­al is that of Versum’s share­hold­ers, and Mer­ck ful­ly expects to receive all cus­tom­ary reg­u­la­to­ry clear­ances in a time­ly manner.