Tomahawk, WI 02/05/2014 (BasicsMedia) – Entegris Inc (NASDAQ:ENTG) has agreed upon buying fellow semiconductor manufacturer, ATMI Inc (NASDAQ:ATMI) in a $1.15 billion deal. The two manufacturers are seeking merger in an effort to acquire larger orders.

Need for merger

Both Entegris and ATMI are involved with supplying high purity materials and packaging systems employed in the manufacture of semiconductors. In a statement, the companies also said that with this step they could jointly establish a leadership in advance process materials aiming at pollution control and water handling. This merger is much needed in the industry for suppliers of semiconductors given the small customer database who require bulk orders.

According to an analyst for Stifel Nicolaus & Co., Patrick Ho, manufacturers like Intel Corp (NASDAQ:INTC), Samsung Electronics Co., and Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) (NYSE:TSM) increasingly control expenses on equipment and hence reduce the number of available big contracts.

Results of acquisition

According to the deal, AMTI shareholder will be liable to $34 in cash on the ownership of every share of the common stock. The quote represents a premium of 26.3% above AMTI’s closing price on Monday, which was $26.93 on the Nasdaq that day. Entegris’s shares increased by 15% in early trading, which means the shares were priced at $11.85 while AMTI’s shares were priced at $33.76.

The companies expect to generate cost savings of around $30 million per year with this deal. Entegris further said that it would fund the entire deal in cash through means of cash-on-hand and debt financing. The company expects the deal to improve its adjusted earnings on every share.

Entegris also reported fourth quarter results on Tuesday, which exceeded expectations as the demand for its liquid and gas filtration and purification technology increased. On the other hand, the Danbury, Connecticut based AMTI reported diminish in demand of the company’s materials in some markets, like microelectronic wafers. This led the company to hire Barclays Capital to advice on new strategies in November when in the following month, it sold its LifeSciences business for $185 million

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