March 1, 2019 / 6:26 PM / 7 months ago

Versum Materials rejects Merck KGaA's unsolicited offer

(Reuters) - Electronic materials maker Versum Materials Inc on Friday formally rejected a $5.9 billion (4.46 billion pounds) 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.

Reporting by Ankit Ajmera in Bengaluru; Editing by Maju Samuel and Louise Heavens

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