Cabot Microelectronics to acquire KMG chemicals

Cabot Microelectronics the supplier of chemical mechanical planarization (CMP) polishing slurries and second largest CMP pads supplier to the semiconductor industry, and KMG Chemicals, a global provider of specialty chemicals and performance materials, have entered into a definitive agreement under which Cabot Microelectronics will acquire KMG in a cash and stock transaction with a total enterprise value of approximately $1.6 billion.

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 Microelectronicscommon stock over the 20-day trading period ended on August 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 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 suppliers of consumable materials to the semiconductor industry. Additionally, the combined company will be a global provider of performance products and services for improving pipeline operations and optimizing throughput.

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 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 and CEO, said, “This is an outstanding combination, bringing together two 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.”