March 8, 2019 / 11:10 AM / a month ago

Versum, Entegris see extra merger benefits, Merck hires Goldman

FILE PHOTO: A logo of drugs and chemicals group Merck KGaA is pictured in Darmstadt, Germany January 28, 2016. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - Entegris and Versum Materials on Friday highlighted additional benefits from their planned all-share merger, while rival bidder Merck KGaA said it had brought in Goldman Sachs to help with its counter offer.

Electrochemicals companies Entegris and Versum said in a letter to shareholders they now expect $125 million in cost benefits, or $50 million more in annual earnings before interest, tax, depreciation and amortization, more than originally identified.

“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,” Versum chairman Seifi Ghasemi and Entegris Chief Executive Bertrand Loy said in the letter.

German drugs and lab supplies group Merck KGaA for its part said it had hired Goldman Sachs as an additional adviser alongside Guggenheim and Sullivan Cromwell.

Goldman Sachs has an established track record as a corporate adviser in contested takeover situations.

Merck on Tuesday had called on Versum’s shareholders to put pressure on management to consider the German group’s $5.9 billion cash bid, including debt, which the U.S. maker of chemicals for semiconductors has spurned in favor of an all-share merger with Entegris.

“The capital market reaction is relatively unequivocal. You see it in Versum’s share price,” Merck Chief Executive Stefan Oschmann had said, reaffirming that his bid was clearly superior.

Merck’s takeover proposal of $48 per share in cash compares with an offer of around $39.6 worth of Entegris stock for each Versum share under the existing deal, based on Entegris’ closing price of $35.38 on Wednesday.

Entegris announced a $4 billion all-stock deal in January for Versum, the former specialty chemicals division of industrial gases group Air Products, saying it wanted to create a big chemical supplier to the semiconductor market at a time when the industry is under pressure.

Reporting by Arno Schuetze; editing by Thomas Seythal and Jane Merriman

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