Cabot to acquire KMG Chemicals for US$1.6 bn
Cabot Microelectronics Corporation, the world’s leading supplier of chemical mechanical planarisation (CMP) polishing slurries and second largest CMP pads supplier to the semiconductor industry, will acquire KMG Chemicals, a global provider of specialty chemicals and performance materials, for US$1.6 billion. 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 combined company is expected to have annual revenues of approximately US$1 billion and approximately US$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 optimising throughput.
“We are excited about the combination of two world-class organisations with dedicated and talented employees that provide innovative, high quality solutions to solve our customers’ most demanding challenges,” said David Li, President/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.”
Chris Fraser, KMG Chairman/CEO, said, “This is an outstanding combination, bringing together two leading companies that will benefit from increased size, scale and geographic reach. 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.”
The purchase price represents a total enterprise value for KMG of approximately US$1.6 billion, inclusive of KMG’s net debt, or approximately 10.9x KMG’s estimated FY18 adjusted EBITDA post US$25 million of estimated annual cost synergies.
After the close of the transaction, it is intended that Fraser becomes an advisor to Cabot Microelectronics during the integration. His extensive experience across the electronic chemicals and performance materials industries is expected to benefit the combined company with its integration efforts, customer and supplier relationships, and revenue expansion.