(Reuters) - Entegris Inc (ENTG.O) said on Monday it would buy rival Versum Materials Inc (VSM.N) in an all-stock deal worth about $4 billion, creating a big chemical supplier to the semiconductor market at a time when the industry is under pressure.
Versum’s shares fell 27 percent in 2018 as demand for microchips used in smartphones and other personal devices plateaued and a decade-long rally in U.S. stock markets wobbled, meaning Entegris is buying at a discount while making a bet on newer uses of chips.
On Monday, Versum’s shares rose 12 percent to $35.37, slightly higher than the 11 percent premium offered by Entegris.
Shares in Entegris, which will hold 52.5 percent of the combined company, rose 2.5 percent to $32.11.
Entegris Chief Executive Officer Bertrand Loy said on a conference call that bets on artificial intelligence, internet of things production and cloud computing are expected to give the industry a boost in the coming years.
Monday’s deal “will position us at forefront of that transition”, said Loy, adding that new applications for semiconductors were emerging everyday.
The combined company will be worth about $9 billion and sell products such as advanced materials, specialty gases and microcontamination control.
Versum Materials shareholders will get 1.120 shares of Entegris for each share held, the companies said. This translates to $3.83 billion, according to Reuters calculations.
The deal is expected to generate more than $75 million in annual cost savings within 12 months of closing, likely in the second half of this year.
Arizona-based Versum Materials posted 2018 annual sales of about $1.4 billion and operates 14 plants in Asia and North America.
Reporting by John Benny in Bengaluru; Editing by James Emmanuel and Sriraj Kalluvila