What happened
Shares of semiconductor materials supplier CMC Materials (CCMP) jumped sharply on Wednesday, rising more than 28% as of 11:45 a.m. ET. The stock's gain came as semiconductor manufacturer Entegris (ENTG -2.24%) announced it was acquiring CMC Materials in a $6.5 billion deal.
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So what
Entegris has entered into an agreement to buy CMC Materials in a cash and stock deal, paying CMC shareholders $133 in cash and 0.4506 shares of Entegris for each CMC share they own. This equates to a 35% premium compared to where CMC Materials' stock was trading as of the market close on Tuesday, explaining the jump in the stock price on Wednesday.
"The addition of CMC Materials' leading CMP [chemical-mechanical planarization] portfolio will broaden Entegris' solutions set, creating a comprehensive electronic materials offering," Entegris said in a press release about the deal. "The complementary nature of the companies' technology platforms will enable Entegris to bring to market a broader array of innovative and high-value solutions, at a faster pace."
Now what
Entegris expects the acquisition to be "significantly accretive" to its adjusted earnings per share within one year of the deal closing. Specifically, Entegris expects it will result in $75 million in annualized cost synergies and $40 million in capital expenditure synergies within 12 to 18 months of closing. And it expects revenue synergies, fueled by "co-optimized solutions, cross-selling opportunities, and stronger customer response and collaboration."
Entegris said the deal is expected to close by the second half of next year but is subject to a CMC shareholder vote and regulatory approval.
