Merck KGaA of Germany completes deal for Versum
For Versum Materials, a year that started off with plans to merge with a U.S. rival ended by instead partnering with a German science and technology company.
Merck KGaA, Darmstadt, Germany, on Monday announced it completed its acquisition of Versum for more than $6 billion, a deal that creates a leading electronic materials player focused on the semiconductor and display industries. Versum, an Air Products spinoff, has a worldwide payroll of 2,300 employees, which includes about 500 throughout the extended Lehigh Valley region.
Merck KGaA officials did not respond to inquiries regarding potential changes to the company’s Lehigh Valley footprint. But company officials have maintained throughout the year that Versum and Merck KGaA are complementary with different regional strengths. A news release Monday noted that Merck KGaA’s employment would increase by about 2,300 to around 56,000 across 66 countries.
“By acquiring Versum, we will be optimally positioned to capitalize on long-term growth trends in the electronic materials industry,” Stefan Oschmann, chairman of the executive board and CEO of Merck KGaA, said in the release. “At the same time, we are broadening Performance Materials, balancing our portfolio with three strong business sectors and sharpening our strategic focus on innovation-driven technologies.”
Merck KGaA expects to reach about $80 million in cost synergies by 2022. An investor presentation this year noted the synergies could be achieved by integrating corporate and administrative functions, optimizing the production and supply chain network and streamlining duplicate structures.
In the Lehigh Valley region, Versum has nearly 80 employees in administrative offices, 114 people at the company’s Delivery Systems & Services group on Vultee Street in south Allentown, 40 employees in research and development in Breinigsville and about 260 workers at a $20 million research and development technology center in Rush Township, Schuylkill County, according to a breakdown provided by Versum this year.
Merck KGaA said it continues to make progress in integrating the two companies.
For example, Versum’s business will be folded into Merck KGaA’s Semiconductor Solutions unit. Within that segment will be two units: Semiconductor Materials, focused on the development and commercialization of material-based solutions for semiconductor manufacturers, and Delivery Systems & Services, focused on the development and deployment of equipment for semiconductor makers.
While Semiconductor Materials will be led by Anand Nambiar, already responsible for the Semiconductor Solutions business unit at Merck KGaA, the Delivery Systems & Services business will be headed by Jeff White, who comes from Versum.
Merck KGaA also reiterated Monday that it intends to use Versum’s headquarters in Tempe, Arizona, as a hub for the combined U.S. electronic materials business.
Morning Call reporter Jon Harris can be reached at 610-820-6779 or at jon.harris@mcall.com.