Entegris, Inc. (NASDAQ: ENTG) today announced that it has
completed its acquisition of CMC Materials, Inc. (NASDAQ:
CCMP).
“It is an exciting day at Entegris. With the closing of the
acquisition of CMC Materials, we are creating the global leader in
electronic materials,” said Bertrand Loy, president and chief
executive officer of Entegris. “We are better positioned than ever
to address our customers’ most demanding process challenges and
support their ambitious technology roadmaps, while achieving a
faster time-to-solution. The addition of CMC Materials further
differentiates our unit-driven platform and will allow us to unlock
significant growth through enhanced innovation, scale and
execution. We are confident that the combined organization will be
poised to deliver meaningful value for our customers, colleagues
and shareholders. Moving forward we are focused on efficiently and
effectively completing the integration of CMC Materials, driving
revenue and cost synergies, and deleveraging the balance
sheet.”
With the addition of CMC Materials’ suite of solutions, Entegris
offers the industry’s most comprehensive portfolio and enhanced
operating capabilities, for applications in the fab environment and
across the semiconductor ecosystem. This expanded portfolio
increases Entegris’ content per wafer opportunity and its
unit-driven revenue from 70% to approximately 80%. Our enhanced
materials and process solutions will help customers improve
productivity, performance and total cost of ownership.
In connection with the completion of the transaction, Entegris
has established a new operating model. The company will now operate
in four divisions:
- Microcontamination Control (MC), will continue to
include the Liquid Microcontamination Control, Gas
Microcontamination Control and New Markets business units;
- Specialty Chemicals and Engineered Materials (SCEM),
will include Entegris’ Advanced Deposition Materials, Specialty
Chemicals, Specialty Materials and Gases and Surface Prep and
Integration business units (all of which were part of the SCEM
division). It will also include CMC Materials’ International Test
Solutions (ITS), as well as Performance Materials operations,
Pipeline and Industrial Materials (PIM) and QED;
- Advanced Materials Handling (AMH), will continue to
include Wafer Handling, Fluid Handling, Sensing and Control, Liquid
Packaging and Life Sciences business units;
- And the new Advanced Planarization Solutions (APS)
Division, which will include an end-to-end suite of CMP
solutions, including CMC Materials’ CMP Slurries, CMP Pads and
Electronic Chemicals businesses, as well as Entegris’ Post CMP
Cleans, Pad Conditioners, CMP Slurries and Brushes business
lines.
Entegris also expanded its Executive Leadership Team, which now
includes:
- Bertrand Loy, President and Chief Executive Officer
- Michael Besnard, Senior Vice President, Chief Commercial
Officer
- Olivier Blachier, Senior Vice President, Business
Development
- Joe Colella, Senior Vice President, General Counsel and
Secretary
- Greg Graves, Executive Vice President, Chief Financial
Officer
- Clint Haris, Senior Vice President and President,
Microcontamination Control
- Jim O’Neill, Senior Vice President, Chief Technology
Officer
- Sue Rice, Senior Vice President, Global Human
Resources
- Neil Richards, Senior Vice President, Global Operations,
Supply Chain and Quality
- Bill Shaner, Senior Vice President and President,
Advanced Materials Handling
- Stuart Tison, Senior Vice President and President,
Specialty Chemicals and Engineered Materials
- Dann Woodland (formerly of CMC Materials), Senior
Vice President and President, Advanced Planarization Solutions
Financial Terms
The total purchase price (inclusive of debt retired and cash
assumed) at close was approximately $5.7 billion1, including $3.8
billion in cash paid to CMC shareholders, 12.9 million2 shares of
Entegris stock, and approximately $900 million of debt retired and
approximately $200 million of acquired cash. Entegris financed the
cash portion of the purchase price through debt financing. Entegris
has significant liquidity at closing, consisting of cash on hand
and an undrawn revolver. Entegris expects to achieve a gross
leverage ratio of ~4.0x by the end of 2022 and thereafter
deleverage to a gross leverage ratio of <3.0x. The breakdown of
the financing is shown below.
The transaction is expected to be accretive to non-GAAP EPS
within one year. Entegris continues to expect to realize $75
million in run-rate cost synergies and $40 million in CapEx
synergies within 12 to 18 months. In addition, Entegris expects to
drive meaningful revenue synergies through co-optimized solutions,
cross-selling opportunities and stronger customer response and
collaboration.
As a result of the completion of the transaction, CMC Materials
has become a wholly owned subsidiary of Entegris, and the shares of
CMC Materials common stock, which previously traded under the
ticker symbol “CCMP” on the NASDAQ, have ceased trading on and will
be delisted from the NASDAQ.
Upcoming Events and Information
Entegris expects to host a virtual Investor and Analyst Meeting
by the fall of 2022, where it will provide an update on the CMC
Materials integration and the overall financial outlook for the
combined platform. The company also expects to provide pro forma
recast historical financials during its third fiscal quarter.
Debt Instruments Used to Close the Transaction:
Amount
Rate
Due
Term Loan B
$2,495m
Term SOFR + 3.00%
2029
Senior Secured Notes
$1,600m
4.75%
2029
Senior Unsecured Notes
$895m
5.95%
2030
364-Day Unsecured Bridge
$275m
Term SOFR + 4.55%
2023
About Entegris
Entegris is the global leader in electronic materials for the
semiconductor market. With approximately 8,800 employees across its
global operations, Entegris offers the industry’s most
comprehensive and innovative unit-driven end-to-end offering for
semiconductor customers, in addition to solutions for the life
sciences and other advanced manufacturing environments. Entegris’
solutions help customers improve their performance, productivity
and yields to enable technologies that transform the world. It has
manufacturing, customer service, and/or research facilities in the
United States, Canada, China, France, Germany, Israel, Japan,
Malaysia, Singapore, South Korea, and Taiwan. For more information
about Entegris, visit us at www.entegris.com, or follow us on
LinkedIn, Twitter, Facebook, and Instagram.
[1] Based on Entegris’ closing price on 6/30 [2] Excluding
unvested CMC stock options and unvested CMC RSU, RSS, and PSU
equity awards assumed
Cautionary Note on Forward Looking Statements
This communication may contain statements that are not
historical facts and are “forward-looking statements” within the
meaning of U.S. securities laws. 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 may
include statements about: the impact of the COVID-19 pandemic on
Entegris’ operations and markets, including supply chain issues
related thereto; future period guidance or projections; Entegris’
performance relative to its markets, including the drivers of such
performance; market and technology trends, including the duration
and drivers of any growth trends and the impact of the COVID-19
pandemic on such trends; the development of new products and the
success of their introductions; the focus of Entegris’ engineering,
research and development projects; Entegris’ ability to execute on
its business strategies, including with respect to Entegris’
expansion of its manufacturing presence in Taiwan; Entegris’
capital allocation strategy, which may be modified at any time for
any reason, including share repurchases, dividends, debt repayments
and potential acquisitions; the impact of the acquisitions Entegris
has made and commercial partnerships it has established; future
capital and other expenditures, including estimates thereof;
Entegris’ expected tax rate; the impact, financial or otherwise, of
any organizational changes; the impact of accounting
pronouncements; quantitative and qualitative disclosures about
market risk; anticipated leadership, operating model, results of
operations, and business strategies of Entegris, CMC and the
combined company; anticipated benefits of the transaction; the
anticipated impact of the transaction on Entegris’ and CMC’s
business and future financial and operating results; the expected
amount and timing of synergies from the transaction; and other
matters.
These forward-looking statements are based on current management
expectations and assumptions only as of the date of this
communication, are not guarantees of future performance and involve
known and unknown risks and uncertainties (many of which are beyond
the combined company’s control and are difficult to predict) that
could cause actual results of the combined company to differ
materially and adversely from the results expressed in, or implied
by, these forward-looking statements. These risks and uncertainties
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 the
combined company’s products and solutions; (ii) the combined
company’s ability to meet rapid demand shifts; (iii) the combined
company’s ability to continue technological innovation and
introduce new products to meet customers’ rapidly changing
requirements; (iv) the combined company’s ability to protect and
enforce intellectual property rights; (v) operational, political
and legal risks of the combined company’s international operations;
(vi) the combined company’s debt profile after giving effect to the
transaction; (vii) the increasing complexity of certain
manufacturing processes; (viii) raw material shortages, supply and
labor constraints and price increases; (ix) changes in government
regulations of the countries in which the combined company
operates; (x) the imposition of tariffs, export controls and other
trade laws and restrictions and changes foreign and national
security policy, especially as they relate to China and as may
arise with respect to recent developments regarding Russia and
Ukraine; (xi) the fluctuation of currency exchange rates and
fluctuations in the market price of Entegris’ stock; (xii) the
level of, and obligations associated with, Entegris’ indebtedness,
including the notes, and the risks related to holding the notes;
(xiii) the impact of public health crises, such as pandemics
(including coronavirus (COVID-19)) and epidemics and any related
company or government policies and actions to protect the health
and safety of individuals or government policies or actions to
maintain the functioning of national or global economies and
markets; (xiv) the ongoing conflict between Russia and Ukraine and
the global response to it; and (xv) the other risk factors and
additional information described in Entegris’ filings with the SEC.
In addition, 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 CMC’s businesses and the ability to
achieve the anticipated synergies and value-creation contemplated
by the transaction; unanticipated difficulties or expenditures
relating to the transaction, the outcome of any legal proceedings
related to the transaction, the response and retention of business
partners and employees as a result of the transaction; and the
diversion of management time on transaction-related issues. These
risks, as well as other risks related to the transaction, are
included in the registration statement on Form S-4, as amended, and
proxy statement/prospectus that were filed with the SEC on January
28, 2022 in connection with the transaction. While the list of
factors presented here is, and the list of factors to be presented
in the registration statement on Form S-4, as amended, and proxy
statement/prospectus are, are considered representative, no such
list should be considered to be a complete statement of all
potential risks and uncertainties. For a more detailed discussion
of such risks and other factors, see Entegris’ and CMC’s 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, 2021, which was
filed with the SEC on February 4, 2022, Entegris’ Quarterly Report
on Form 10-Q for the fiscal quarter ended April 2, 2022, which was
filed with the SEC on April 26, 2022, CMC’s Annual Report on Form
10-K for the fiscal year ended September 30, 2021, which was filed
with the SEC on November 12, 2021 and amended by the Form 10-K/A
filed with the SEC on January 19, 2022, and CMC’s Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 2022, which was
filed with the SEC on May 5, 2022, and in other periodic filings,
available on the SEC website or www.entegris.com or
www.cmcmaterials.com. The combined company assumes 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20220706005273/en/
Bill Seymour Vice President of Investor Relations, Treasury, and
Communications +1 952 556 1844 bill.seymour@entegris.com
CMC Materials (NASDAQ:CCMP)
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