March 1, 2019 / 6:26 PM / 6 months ago

UPDATE 1-Versum Materials rejects Merck KGaA's unsolicited offer

(Adds Merck comment, background)

March 1 (Reuters) - Electronic materials maker Versum Materials Inc on Friday formally rejected a $5.9 billion unsolicited cash offer from Merck KGaA, saying it was committed to the agreed merger with U.S. rival Entegris .

Both Merck and Entegris are looking to boost their electrochemicals businesses at a time when the industry is under pressure.

German drugs and lab supplies maker Merck said on Wednesday it would pay $48 per Versum share - or $5.9 billion in total including debt - in a takeover proposal to the U.S. group’s management.

That was designed to scotch a $4 billion all-stock takeover from Entegris, which agreed to buy Versum in January. At Entegris’ current share price, that deal would translate into a value per Versum share of about $40.

Versum’s total debt stood at $980 million at the end of the last financial year ended Sept. 30, according to Refinitiv Eikon data.

“We reaffirm our view that our proposal is clearly superior,” a Merck spokesman said.

To deter Merck from building a stake, Versum on Thursday announced a plan to give shareholders the right to purchase stock at a reduced price if a potential bidder buys 12.5 percent or more of Versum’s stock.

Catering to the electronics industry, family-controlled Merck is seeking to bolster its high-tech chemicals division, which includes its shrinking liquid crystals business.

The liquid crystals, which go into TV screens, used to enjoy operating profit margins of 40-50 percent but the unit now under pressure from Chinese rivals.

In all, Merck is diversified across three separate businesses, including a pharmaceuticals unit and a life science division that makes supplies and gear for biotech labs.

$1 = 0.8791 euros Reporting by Ankit Ajmera in Bengaluru; Editing by Maju Samuel and Louise Heavens

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