Entegris and Mykrolis combine in $1.3 billion transaction

Jan. 19, 2005

Entegris, Inc. (Nasdaq: ENTG), of Chaska, Minn., and Mykrolis Corporation (NYSE: MYK), of Billerica, Mass., two leading suppliers to the global semiconductor and related industries, has announced a definitive agreement to combine in a merger-of-equals transaction that creates a combined company valued at approximately $1.3 billion.

The combined company, which will be known as Entegris, Inc., will have combined trailing annual sales of more than $650 million. It will be the global leader in materials integrity management, focused on purifying, protecting and transporting critical materials, such as liquids, gases, wafers and components, used in the semiconductor, microelectronics and other high-technology industries. The merged company will have an established global network of sales and support offices across North America and Europe, with a particularly strong presence in Japan, Taiwan and elsewhere in Asia, the fastest-growing region for semiconductor and electronics manufacturing. 

Under the terms of the agreement, which was unanimously approved by the Boards of Directors of both companies, Entegris and Mykrolis will merge in a stock-for-stock exchange, tax-free for the shareholders of both companies, in which Mykrolis shareholders will receive 1.39 shares of Entegris common stock for every share of Mykrolis common stock they hold. The transaction value is based on the exchange ratio, the closing stock prices of Entegris and Mykrolis on their respective listing exchanges on Friday, March 18, 2005, and the approximately 74.0 million and 42.0 million primary shares of Entegris and Mykrolis, respectively, currently outstanding. Upon completion of the transaction, which is expected to occur in the third calendar quarter of this year, current Entegris shareholders will own approximately 56 percent of the combined enterprise and current Mykrolis shareholders will own approximately 44 percent. The transaction is expected to be earnings-neutral in the second half of 2005 (excluding non-cash purchase accounting adjustments) and (also excluding such adjustments) accretive by approximately $0.08 to the earnings per share of the combined company in calendar year 2006?the first full year after the expected completion of the transaction?including $15 million in identified cost savings from the combination.

Upon completion, the new Entegris will be headed by Gideon Argov, currently CEO of Mykrolis, as Chief Executive Officer, with James E. Dauwalter, currently CEO of Entegris, serving as non-executive Chairman of the Board of Directors; Jean-Marc Pandraud, currently President and COO of Mykrolis, serving as Executive Vice President and Chief Operations Officer; Michael W. Wright, currently President and Chief Operating Officer of Entegris, serving as Executive Vice President and Chief Marketing Officer; John Villas, currently CFO of Entegris, serving as Chief Financial Officer; and Bertrand Loy, currently Mykrolis' CFO, serving as Senior Vice President and Chief Integration Officer. The new Entegris Board will consist of eleven directors, including five from the current Entegris board, five from the Mykrolis board, and one independent director chosen by the new Entegris Board of Directors after the merger. The new Entegris will be headquartered in Chaska, with a continued significant corporate presence in Billerica.

The merger brings together two established enterprises that serve virtually every major player in the semiconductor industry and with products and services that have little overlap. 

Entegris, whose fiscal year 2004 sales related to consumables were about 60 percent of total sales, provides products and services used by the semiconductor, data storage, life science and fuel cell markets to protect and transport critical materials. In the semiconductor market, it provides products and services related to wafer processing and shipping, finished wafer shipping, reticle handling, bare die shipping and handling, packaged device shipping and handling, ultrapure and corrosive chemical/fluid storage, transport, sensing and control.

Mykrolis' products measure, deliver, control and purify the process liquids and gases used throughout the semiconductor manufacturing process. The company's consumable products, which in 2004 represented 70 percent of Mykrolis sales, include a broad range of liquid and gas filters and purifiers. Its line of equipment comprises systems for dispensing photochemicals and other coatings as well as a variety of other components used in the delivery of gases to the process tool. In addition to the semiconductor industry, Mykrolis serves related markets including manufacturers of chemicals, flat panel displays and data storage devices.

Completion of the transaction is subject to the approval of Mykrolis and Entegris shareholders, expiration or early termination of the applicable Hart-Scott-Rodino waiting period, and customary closing conditions. It is anticipated that the combined enterprise, which will be incorporated in the State of Delaware, will be a Nasdaq-listed company and trade under the ticker symbol ENTG.

The combined company will have combined trailing annual revenue in excess of $650 million, and combined trailing annual operating income of approximately $75 million. It will have a strong balance sheet, including approximately $284 million of cash and marketable securities.

Gideon Argov, chief executive officer of Mykrolis, said: "This merger of equals offers considerable strategic, operating, technological and financial synergies. For example, more than 60 percent of the sales of the combined company will come from consumable products, which should enhance our ability to navigate through industry and economic cycles. I am personally delighted that Mykrolis, an outstanding and successful organization which I joined as CEO last November, will itself be joining forces with an equally outstanding and successful enterprise.

"In a period of industry consolidation, this transaction will establish the new Entegris as a significant supplier to the semiconductor device industry. We will be well-positioned to better serve our customers, grow our business and build further value for our shareholders," Mr. Argov said.

Jim Dauwalter, CEO of Entegris, said: "The complementary fit of Entegris and Mykrolis makes us ideal merger partners. Mykrolis is a company whose people, products, vision and values fit remarkably well with those of Entegris. The merger will best serve the needs of our customers by helping them purify, protect and transport the semiconductor and microelectronic components and devices they offer as quickly, cost-effectively and profitably as possible. Semiconductors and microelectronics are increasingly global industries of scale, with particularly rapid growth in Asia. We share the view that the companies serving these customers must be global, Asia-focused and of scale as well.

"The new Entegris will have significant growth opportunities within the semiconductor and microelectronics industry, as well as in other high-technology industries needing materials integrity management. Along with Michael Wright and the rest of our colleagues on the Entegris board and management team, I look forward to completing this important transaction and delivering its benefits to our respective customers, business partners, employees and shareholders," Mr. Dauwalter said.

Entegris has approximately 1,800 worldwide employees and Mykrolis approximately 900, both excluding temporary workers. During the past 12 months, 63 percent of Entegris' sales were outside North America, compared with 74 percent for Mykrolis; Japan and the rest of Asia made up 48 percent of Entegris sales and 64 percent of Mykrolis sales.

The companies have identified approximately $15 million in annual cost savings, to be achieved principally through the rationalization of duplicative administrative functions and facilities. It is expected that approximately 5 percent of the combined company's workforce will be affected by the merger. Necessary staff reductions will be achieved through normal attrition wherever possible.

On January 27, 2005, Mykrolis issued its financial results for its fourth quarter and fiscal year ended December 31, 2004. Net income for the quarter was $7.6 million or $0.17 per diluted share on net sales of $74.0 million. For the year, Mykrolis reported net sales of $289.2 million and net income of $29.6 million or $0.68 per diluted share.

On September 30, 2004, Entegris issued its financial results for its fiscal year ended August 28, 2004, reporting record sales of $346.8 million and net income for the year of $24.8 million or $0.32 per diluted share. On March 17, 2005, Entegris reported its financial results for its second quarter ended February 26, 2005, which included net income of $4.5 million or $0.06 per diluted share on sales of $85.1 million.

Entegris, formed by the 1999 merger of Fluoroware Inc. (founded in 1966 by the late Victor Wallestad) and Empak Inc., has been a public company listed on the NASDAQ Stock Market®  since July 2000. Mykrolis, formerly the microelectronics division of Millipore Corporation, separated from Millipore in March 2001 and was listed on the New York Stock Exchange in August 2001. 

Entegris' financial advisor with regard to the transaction is Goldman, Sachs & Co. and its legal advisors are Faegre & Benson LLP and Dunkley and Bennett P.A. Mykrolis' financial advisor with regard to the transaction is Citigroup Global Markets Inc. and its legal advisor is Ropes & Gray LLP.

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