A hostile bid acquisition offer for Versum Materials worth a total of $5.9 billion all-cash deal was launched by German pharma group Merck KGaA on Tuesday as the German firm attempts to increase its presence in the semiconductor materials market. the bid is also to dwarf a rival bidder.

Merck’s unsolicited cash offer has been opposed by Versum which is the former speciality chemicals division of industrial gases group Air Products. The offer from Merck was first made earlier this month. Denying the initial offer, Versum had said that the company had already committed in January this year to merge with U.S. rival Entegris in an all-share deal.

“The Versum board’s hasty rejection of our proposal and unwillingness to engage in discussions with us has forced us to take this proposal directly to shareholders,” family-controlled Merck said in a letter to Versum shareholders.

This the first time that a hostile takeover attempt has been made since 2006 by the diversified firm Merck which is still privately held and controlled by descendants of the founder of the group. The company was founded in the 17th century. In 2006, Merck attempted to acquire domestic German drugs rival Schering but the company was ultimately acquired by Bayer in a deal worth 17 billion euros.

Since BASF’s 2006 hostile approach for a takeover for catalytic converter maker Engelhard, which resulted in a positive deal, this move by Merck is the first hostile bid by a German firm for a U.S. target.

The letter to Versum shareholders says that the offer from Merck would last till June 7. The offer would only transform into a deal if Merck manages to win over investors with combined holdings of more than 50 per cent of Versum shares, said a Merck spokesman.

“Now the burden shifts to the Versum board to explain with much greater clarity any objections they may have about this offer,” said one Versum shareholder, who was previously leaning towards the Entegris deal.

There was a 0.5 per cent rise in Versum shares which showed that shareholders expected in increase in the bidding.

“This tells me the ball is now in the Entegris court to either increase its offer or to go away,” the investor added, asking not to be named.

The offer from Merck was being looked into by the governing board of Versum and the shareholders of the company would be informed about the formal stance of the board within 10 business days, the company said.

The merged group’s development potential from cost and revenue benefits, emphasised a statement from Entegris.

“Merck’s low premium, change-in-control offer would prevent the stockholders of both companies from participating in potential upside of the combined company,” it said.

Merck now aims to serve the electronics industry electronics industry and is in the process of developing a high-tech chemicals division called Performance Materials. A major part of that is its liquid crystals business.

(Adapted from Nasdaq.com)

Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized