Fort Worth-based KMG Chemicals Inc. is being acquired by Cabot Microelectronics Corp. in a $1.2 billion deal, the two companies announced Aug. 15.
KMG is a global provider of specialty chemicals and performance materials, while Aurora, Illinois-based Cabot Microelectronics is the world’s leading supplier of chemical mechanical planarization (CMP) polishing slurries and second largest CMP pads supplier to the semiconductor industry.
According to an investor presentation regarding the acquisition, the deal will enhance CMC’s world-class electronic materials platform, providing increased scale, product depth and geographic diversity and expand the company’s portfolio to include leading positions in high growth industries.
Under the terms of the agreement, KMG shareholders will be entitled to receive, per KMG share, $55.65 in cash and 0.2000 of a share of Cabot Microelectronics common stock, which represents an implied per share value of $79.50 based on the volume weighted average closing price of Cabot Microelectronics common stock over the 20-day trading period ended on Aug. 13, 2018. The transaction has been unanimously approved by the Boards of Directors of both companies and is expected to close near the end of calendar year 2018. The deal is expected to close by the end of the year.
KMG has 19 sites across the globe, including four in Texas and 750 full-time employees. The company reported revenues of $333.4 million for its fiscal 2017.
The combined company is expected to have annual revenues of approximately $1 billion and approximately $320 million in EBITDA, including synergies, extending and strengthening Cabot Microelectronics’ position as one of the leading suppliers of consumable materials to the semiconductor industry. Additionally, the combined company will be a leading global provider of performance products and services for improving pipeline operations and optimizing throughput.
“This is an outstanding combination, bringing together two leading companies that will benefit from increased size, scale and geographic reach,” said Chris Fraser, KMG chairman and CEO. “For KMG shareholders, this transaction creates significant and immediate value while also providing participation in the future growth of the combined company. Thanks to the dedication and hard work of KMG employees around the world, KMG has achieved significant progress over the past several years, and I am confident that Cabot Microelectronics will continue to build on this success to further enhance value for our shareholders.”
“We are excited about the combination of two world-class organizations with dedicated and talented employees that provide innovative, high quality solutions to solve our customers’ most demanding challenges,” said David Li, president and CEO of Cabot Microelectronics. “KMG’s industry-leading electronic materials business is highly complementary to our CMP product portfolio, while its performance materials business broadens our product offerings into the fast-growing industry for pipeline performance products and services. We welcome KMG’s employees to our team and look forward to our future together as one company.”
KMG’s history dates back to the 1980s, when the company acquired its first pentachlorophenol distribution business. Wood treating chemicals was the company’s original growth platform. In May 2015, KMG established a new growth platform with the acquisition of Houston-based Val-Tex, a manufacturer of industrial valve lubricants and sealants, then broadened its market again with the February 2017 acquisition of Sealweld, a premier supplier of high-performance products and services to global pipeline operators.