VSM Versum Materials Inc

By Micah Maidenberg and Donato Paolo Mancini 

German pharmaceutical and chemical company Merck KGaA says it wants to buy Versum Materials Inc. for more than $5 billion, potentially scuttling a pending merger Versum has with another company.

Merck said it has proposed acquiring Versum for $48 a share in cash, making the equity value of the deal about $5.24 billion.

Shares of Versum, a Tempe, Ariz.-based company that provides materials used in manufacturing semiconductors and to make other electronics, closed Tuesday at $41.40 a share, meaning Merck's offer represents a 16% premium. A spokesman for Merck didn't immediately respond to a call.

Last month, Versum announced its own merger deal, saying it plans to combine with Entegris Inc. That deal would result in Versum shareholders owning a 47.5% stake in the combined company.

Versum said in a statement on Wednesday that it continues to believe in the strategic and financial rationale of the Entegris deal, but said it would thoroughly review Merck's offer.

Shares of Versum were trading at $48.62 a share on Wednesday, up more than 17%.

Merck said in a statement it wants to further strengthen its operations in the U.S., where the company employs more than 10,000 people at more than 50 sites.

Versum said in a recent securities filing it would be required to pay $140 million if its merger with Entegris isn't completed.

In a letter to Versum's board, Merck said it has long been impressed with the company, and that the proposed deal with Entegris significantly undervalues Versum.

"Instead of the speculative value offered by the Entegris transaction, the all-cash proposal would deliver immediate and certain cash value to Versum stockholders and employees, shielding them from the significant integration, operational and market risks posed by the all-stock Entegris transaction," Stefan Oschmann, chairman and CEO at Merck, said in the letter.

A representative for Entegris couldn't immediately be reached.

Shares of Entegris dropped 4.7% in premarket trading. The company develops and supplies specialty materials for the electronics industry and is based outside of Boston.

Merck shares traded 3% lower in late trading in Frankfurt.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

February 27, 2019 11:53 ET (16:53 GMT)

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