By Chris Wack
Element Solutions said Monday that it has agreed to pay Entegris $185 million, net of estimated cash tax benefits, in order for the companies to terminate their long-standing agreement for Entegris to sell Element Solutions’s ViaForm electrochemical deposition products.
The wafer-level plating products for semiconductor fabricators are currently developed and manufactured by MacDermid Alpha Electronics Solutions, a business unit of Element Solutions, and have been sold by Entegris under an evergreen distribution agreement.
Following a transition period, Element Solutions is managing all aspects of the ViaForm product line in-house, which the company believes would result in a more efficient supply chain and improved customer outcomes.
Element Solutions expects to fund the payment to terminate the distribution agreement with a combination of cash on hand and an incremental $150 million borrowing under the company’s senior credit facility.
Element Solutions also said it has acquired Kuprion, a developer of next-generation nano-copper technology for the semiconductor, circuit board and electronics assembly markets. The acquisition was structured with an upfront payment and potential earn-out payments based on milestones associated with product qualification and revenue over several years.
Both the Entegris and Kuprion transactions are expected to be immediately accretive to adjusted earnings per share, result in a sizeable cash tax benefit, and represent a combined $15 million of annualized adjusted Ebitda with significant growth potential as electronics technologies and markets advance and win customer qualifications.
Write to Chris Wack at chris.wack@wsj.com
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