S&P Says Versum Would Boost Merck’s Performance-Materials Unit

S&P Global Ratings on Wednesday said an acquisition of Versum Materials by Merck KGaA would provide a significantly boost to the German company’s performance-materials division, adding that it expects Merck will move quickly to reduce the debt it would incur.

Merck earlier Wednesday said it has proposed to acquire Versum in a cash deal with a total value of about $6 billion.

S&P, which currently rates Merck at “A” with a stable outlook, said such a deal would raise the company’s adjusted leverage to about 3.3-times from about 2.5-times. However, the ratings agency said Merck is committed to quickly deleveraging, as it did after its $17 billion acquisition of Sigma-Aldrich in 2015.

S&P said Versum would improve Merck’s position in the profitable and rapidly expanding semiconductor end-market, and that its believes Merck would be able to pare its leverage to below 3-times by the end of 2020.

Versum, which last month announced an all-stock merger with Entegris, on Wednesday said it would review Merck’s offer, but that it continues to believe in the rationale of the Entegris deal.

https://www.marketscreener.com/VERSUM-MATERIALS-INC-31513855/news/S-P-Says-Versum-Would-Boost-Merck-s-Performance-Materials-Unit-28079497/