Merck Takes Versum Bid Hostile With Proxy Vote Proposal

(Bloomberg) -- Merck KGaA went hostile with its $5.9 billion bid for Versum Materials Inc., appealing directly to shareholders for votes against the semiconductor-components maker’s planned merger with rival Entegris Inc.

The planned $3.8 billion combination with Entegris “is not the best option for the Versum stockholders” and inadequate compared with Merck’s offer, the Darmstadt, Germany-based company said in a Securities and Exchange Commission filing Tuesday.

Merck Chief Executive Officer Stefan Oschmann is ramping up his pursuit of deals as he looks to shore up the company’s performance-materials division, the smallest of its three main units. The company was rebuffed in its efforts to barge into the merger for a second time last week when Versum Chairman Seifi Ghasemi said the Entegris deal is a “superior strategic and financial combination.”

A joint proxy statement filed Feb. 28 by Entegris doesn’t indicate that Versum’s board “conducted any process to examine strategic alternatives” before approving the merger, according to Merck’s filing. The German company made its takeover offer because the merger agreement allows Versum’s board to change its recommendation if it receives a superior proposal, the filing said.

Oschmann called Ghasemi on Feb. 27 to inform him of Merck’s interest in a purchase. The CEO then made an unsuccessful attempt to speak with Ghasemi by telephone on March 4, according to the filing.

Merck, which isn’t linked with U.S. drugmaker Merck & Co., rose 1.5 percent in Frankfurt. Versum and Entegris were both little changed in New York. Versum was trading at $49.05 a share, above Merck’s $48-a-share offer.

Merck may have to move on to other targets if it can’t get support from Versum’s holders. While Oschmann has said the company is committed its bid, he has also said there are other attractive targets in semiconductors.

Representatives for Versum and Entegris declined to comment beyond the letter issued to shareholders of both companies last week, reiterating the benefits of their deal.

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