In late March, materials science and engineering provider Entegris (www.entegris.com) reached a $1.3 billion merger agreement with Mykrolis (www.mykrolis.com), a provider of gas and liquid delivery systems for semiconductor processes. Entegris is banking on Mykrolis to give it a stronger foothold in the worldwide semiconductor market by providing added expertise and technology to allow it to deliver a more complete materials management system.

Entegris’s business model is based on a concept called materials integrity management. “Basically, anything that touches a material that’s critical is something we make,” says Michael Wright, COO and president of Entegris. However, Wright says that as 65 nanometer technologies come to market, the materials that factor in semiconductor processes are getting smaller and smaller and filtration and purification technologies are growing in importance.

This trend made the merger with Mykrolis particularly advantageous for Entegris, as Mykrolis is an established provider of filters and purifies for semiconductor applications. As a result, Wright says Entegris can now offer its customers a solution that covers the entire lifecycle of the semiconductor process from fluid and wafer handling, sensing and control, and containment to gas and liquid filtration and purification.

According to a June 16 analyst report by Merrill Lynch, Entegris’s stock is a recommended buy, due in part to the upside potential of the Mykrolis merger. The report predicts Entegris’s stock price will rise from $9.30 to $13.00 over the next 12 months. Merrill Lynch also notes that it expects Entegris to eclipse its stated goal of $15 million in savings as a result of the merger as the two companies capitalize on cross-selling opportunities. However, Merrill Lynch’s report says Entegris’s stock presents a high risk of volatility for investors. As of July 11, Entegris was trading at $11.00.

Under terms of the merger, the Mykrolis brand name will be maintained, but the company will be called Entegris. Wright says he expects the process of joining the two companies to be a smooth one, as the overlap between product lines is marginal. In addition, he expects the two companies to benefit from each other’s strength in certain regional markets. Mykrolis has a strong presence in the Asia Pacific region, which Wright believes will help sell Entegris products into certain developing countries such as China. Likewise, Wright expects Entegris’s strength in North America and Europe to help Mykrolis products gain prominence in those geographic markets.

Entegris will also be looking for opportunities to bring new products to some of the other markets it serves, such as data storage, life science, and fuel cell. “Certainly, any new technology that we develop, we’ll have an eye toward making that applicable to the life sciences industry,” says Wright. Further, Wright says Entegris is always looking for opportunities to gain competitive advantage in the industries it serves through additional mergers and acquisitions.

Ultimately, Wright says Entegris is trying to build a solution set that helps improve the economic platform for the customer. By merging with Mykrolis, Wright believes Entegris is in a better position to provide its semiconductor customers a package that addresses all of their materials handling needs at a reasonable price point. “Typically, the emotional equity that is put into high-tech is invested around the technology, and that’s OK, because we’d be nowhere without that passion,” says Wright. “But at the end of the day, [the technology] has to make sense from an economic perspective.”

— Flow Control Staff