What does the process look like if shareholders want to vote against the Entegris acquisition? What are the details, step-by-step, of the process?
- The voting procedures are set forth in further detail in the preliminary proxy statement. If you want to vote against the Entegris acquisition, most shareholders will be able to vote by proxy in three ways:
- By Internet – You will be able to vote via the Internet by following the instructions on the GREEN proxy card or GREEN voting instruction form;
- By Telephone – In the United States and Canada, you will be able to vote by telephone by following the instructions on the GREEN proxy card or GREEN voting instruction form; or
- By Mail – You will be able to vote by mail by signing and dating the GREEN proxy card or GREEN voting instruction form and returning it in the postage-paid envelope provided with the proxy statement.
- Please note that the proxy statement is not effective at this time and the GREEN proxy card has not been distributed. We plan to file a definitive proxy statement with the SEC and mail the GREEN proxy card to shareholders once the SEC process is complete.
Can shareholders vote against the Entegris acquisition independently of the preliminary proxy statement that Merck KGaA, Darmstadt, Germany, has filed today?
- Yes, shareholders will also be able to (i) vote “Against” the proposal to adopt the Versum-Entegris merger agreement on the proxy card that Versum will send to all Versum shareholders or (ii) abstain from voting on the proposal to adopt the Versum-Entegris merger agreement.
How many shareholders must vote against the Versum-Entegris merger agreement to successfully oppose it?
- The adoption of the Versum-Entegris merger agreement requires the affirmative vote of a majority of the outstanding shares of Versum common stock entitled to vote thereon. Accordingly, if a Versum stockholder abstains from voting this will have the same effect as a vote “Against” the Entegris acquisition.
When is the special meeting?
- This information has not yet been disclosed by Versum, but when it is we will insert that information into the definitive proxy statement, which will be filed by Merck KGaA, Darmstadt, Germany at a later date.
Why should shareholders vote against the Compensation Proposal and the Adjournment Proposal? Isn’t the vote against the Entegris acquisition the only relevant one?
- We believe that the other special meeting proposals are a group of related proposals whose purpose is to facilitate, or which are conditioned upon the completion of, the Entegris acquisition, which we oppose. Therefore, we will be soliciting proxies from Versum shareholders “Against” such proposals.
Why is Merck KGaA, Darmstadt, Germany, filing the preliminary proxy now? Is this a reaction to Versum’s second rejection of your proposal?
- We are filing a preliminary proxy statement now because the Entegris acquisition continues to not be in the best interest of Versum shareholders and we want to provide Versum shareholders with a clear opportunity to vote “Against” the Entegris acquisition. Versum shareholders have indicated to us their interest in having a means to express their support of our superior proposal. They will be able to do so by voting the GREEN proxy card against the Entegris acquisition.
Why does Merck KGaA, Darmstadt, Germany believe that the Versum-Entegris merger agreement was rushed?
- The Versum-Entegris proxy indicates that discussions between the parties began in December 2018, with an announcement less than two months later. Moreover, it include no evidence that the Versum Board conducted any process to examine strategic alternatives. Versum did not contact us to check what alternatives might be available to Versum’s shareholders. This hastiness indicates the parties’ willingness to forgo other strategic offers.
Why should Versum shareholders accept your proposal now that the Versum Board of Directors has recommended a merger with Entegris? Why is your proposal superior? How does the deal create value?
- Our proposal is superior for Versum shareholders, combining the certainty of an all-cash transaction with a 51.7% premium over Versum’s last undisturbed trading price on the day prior to the Versum / Entegris merger announcement.
- Unlike the Entegris transaction, the only shareholder approval required by Merck KGaA, Darmstadt, Germany's proposal is that of Versum's shareholders.
How many outstanding shares does Versum have?
- According to Versum’s 10-Q filed on February 7, 2019, Versum has 109.1M shares outstanding.
What is the premium and how is it justified, especially to Merck KGaA, Darmstadt, Germany shareholders?
- Our announced transaction price of $48 represents a premium of
- 51.7% to Versum’s unaffected closing price of $31.65 as of January 25, 2019.
- 15.9% to Versum’s closing price as of $41.40 as of February 26, 2019;
- Our proposal implies an enterprise value to 2019 EBITDA multiple of 12.6x, which is reflective of the caliber of business Versum has built. When taking into consideration our expected run rate of combination synergies, the implied enterprise value to 2019 EBITDA multiple is 11.0x. We believe this combination will create substantial value for Merck KGaA, Darmstadt, Germany shareholders as we create a market leading innovator in end markets poised for an inflection.
What are the next steps?
- It is now up to Versum’s Board of Directors to review our proposal. We trust that the Versum Board of Directors will make the formal determination that our proposal represents or could reasonably be expected to represent a superior one.
- Immediately following such determination, we would enter into direct discussions with Versum to reach a definitive agreement. Given that we are prepared to complete the transaction consistent with the terms agreed with Entegris, we expect the transaction can close in 2H19.
How much conviction do you have behind your proposal? Can we count on you to see it through?
- We believe very strongly in the strategic, financial and operational benefits of this transaction for both companies.
- We fully expect a favorable reaction to our attractive proposal as both financial and non-financial terms clearly speak for themselves.
- We are fully committed to enter into the transaction as soon as reasonably practicable. This is demonstrated by the fact that our proposal reflects a premium of more than 50% to Versum’s undisturbed share price, on 25 January 2019, the day prior to the Versum-Entegris merger announcement. In addition to that, our proposal is all-cash.
What will happen to Versum’s management and HQ?
- We are a long-term oriented, family-owned, science & technology company; we have a strong track record of successfully completing large U.S. acquisitions and investing for growth. As a case in point, we will maintain Versum’s site in Tempe, AZ as the major hub for the combined electronic materials business in the U.S.
- Our high regard for Versum’s management and its employees will be reflected in all decisions and we expect the leadership of Versum to be personally involved in this process. Right now we are focused on closing the transaction and will make organizational decisions on integration at the appropriate time.
What are the expected synergies between Merck KGaA, Darmstadt, Germany and Versum?
- We expect to realize cost synergies of about €60 million p.a., mainly derived from SG&A rationalization. While we also expect to realize some topline revenue gains, we have not included those in our synergy projections, and as such the final realized synergies from the transaction can be expected to exceed our initial projections. While synergies are of course important, they are not the primary focus for this transaction. Our proposal follows a strong industrial logic and brings two strong complementary partners together to form a leader in the electronic materials market with great growth potential.
How would the acquisition benefit customers?
- The combined R&D strength of Merck KGaA, Darmstadt, Germany and Versum would increase innovation speed, capacity and expertise to generate novel technologies. Together, we would be able to provide better technology solutions to our customers given our breadth of expertise.
- We would join forces to strengthen our supplier base, quality and logistics. Our enhanced global presence and a strengthened supply chain will ensure reliable supply for customer’s needs worldwide.
- Our portfolios are very complementary with our established presence in lithography and Versum’s established position in deposition, thereby bringing novel technologies to our customers. We are complementary in the biggest electronics markets, with Versum adding strength in the U.S. and South Korea, and Merck KGaA, Darmstadt, Germany bringing in a strong footprint in certain major Asian markets.
How would the acquisition affect suppliers?
- Until closing, Merck KGaA, Darmstadt, Germany and Versum will remain two separate companies competing in the marketplace. This means nothing will change in relation to our existing suppliers.
- Following closing, the full procurement team will meet as soon as feasible with strategic suppliers to map out new scope of business opportunities and terms.
Why are you confident you can obtain the requisite U.S. regulatory clearances to close this deal in a timely manner?
- We expect the transaction can close in 2H19, subject to customary closing conditions. Legal or regulatory obstacles are not expected.
- We already have a strong presence in the U.S., where we have proven ourselves to be an outstanding employer of U.S. talent and an outstanding corporate citizen.
- Merck KGaA, Darmstadt, Germany has invested over US$24 billion in the U.S. over the past decade and employs more than 10,000 people across 56 sites nationwide.
- We are an experienced acquirer and already successfully completed numerous regulatory filings in the U.S. M&A context.
How will this deal be financed? How does your leverage change?
- Merck KGaA, Darmstadt, Germany has a market capitalization of approximately €41 billion and a strong investment grade credit rating. Any requisite financing in excess of cash on hand would be supported by committed financing with no incremental conditionality.