Element Solutions Announces Two Strategic Semiconductor Transactions
June 5, 2023 | Business WireEstimated reading time: 3 minutes
Element Solutions Inc., a global and diversified specialty chemicals company, announced two transactions to enhance its capabilities and deepen customer relationships in advanced electronics materials markets. Together, these transactions represent approximately $15 million of annualized adjusted EBITDA with significant growth potential as electronics markets improve and certain new technologies win customer qualifications.
Element Solutions has agreed to pay $185 million, net of estimated cash tax benefits, to Entegris, Inc. to terminate its long-standing distribution agreement for ViaForm® electrochemical deposition products. These wafer level plating products for the world’s largest semiconductor fabricators are currently developed and manufactured by MacDermid Alpha Electronics Solutions, a business unit of Element Solutions, and have been distributed by Entegris under an evergreen distribution agreement. Following a transition period, Element Solutions will manage all aspects of the ViaForm® product line in-house, which we believe will result in a more efficient supply chain and improved customer outcomes. The payment will be funded by a combination of cash on hand and an incremental $150 million borrowing under the Company’s senior credit facility.
Element Solutions has acquired Kuprion, Inc., a developer of next-generation nano-copper technology to the semiconductor, circuit board and electronics assembly markets. The company’s ActiveCopper™ technology addresses the effects of thermal expansion and offers superior performance and reliability in a host of growth applications, including electric vehicles, high frequency 5G networks, IC substrate manufacturing, advanced packaging, mission critical aerospace and defense systems, and datacenters. This transaction has been structured with an upfront payment and potential earn-out payments based on milestones associated with product qualification and revenue over several years.
President and Chief Executive Officer Benjamin Gliklich said, “These transactions deepen our relationships and capabilities in compelling, long-term growth markets propelled by the proliferation of high-performance computing supporting artificial intelligence, industrial automation, and other emerging applications. The current weakness in the electronics sector represents an attractive opportunity to invest and position ourselves for the inevitable recovery. Entegris has been a solid long-term partner distributing our ViaForm® technology. Over time, however, we both agreed that unified responsibility of all aspects of the product cycle - from innovation and manufacturing through to sales and support - would be best for our customers and the growth of the product line. These products are integral to semiconductor production at the largest fabricators in the world and strengthen our relationships and value-proposition to this important supply chain. The transaction is revenue growth, margin, and CRI (Cash Return on Investment) accretive and should increase the contribution of our Electronics segment to the Company’s annual adjusted EBITDA to over 70%. We thank Entegris and its legacy companies for their partnership over 20 years and for the strong commercial position they helped build. We look forward to providing an improved offering to our customers.”
Mr. Gliklich continued, “Our acquisition of Kuprion brings another highly-differentiated capability to our portfolio together with the world-class R&D and applications team who developed it. Their technology is designed to solve the increasingly difficult challenges associated with thermal management and adhesion in leading-edge electronics. We believe this represents industry-changing technology with broad applications across our portfolio, from semiconductor packaging to IC substrate metallization and electronics assembly. Combining Kuprion’s solutions and technical capability, already sought after by many of our largest customers, with our breadth of sales, service and applications expertise will create tremendous growth opportunities.”
Mr. Gliklich concluded, “The transactions we are announcing today together are immediately accretive to adjusted earnings per share (EPS) and result in a sizeable cash tax benefit. We expect a net debt to adjusted EBITDA ratio of 3.6x at the end of the second quarter of 2023, which we expect to return below our 3.5x long-term target by the third quarter and decline even further in the fourth quarter of this year. We believe this is appropriate given these unique capital allocation opportunities, which enhance growth opportunities and business quality and which were available at reasonable valuations in this market window.”
Suggested Items
Book Excerpt: The Printed Circuit Assembler’s Guide to... Factory Analytics
04/24/2024 | I-Connect007 Editorial TeamIn our fast-changing, deeply competitive, and margin-tight industry, factory analytics can be the key to unlocking untapped improvements to guarantee a thriving business. On top of that, electronics manufacturers are facing a tremendous burden to do more with less. If you don't already have a copy of this book, what follows is an excerpt from the introduction chapter of 'The Printed Circuit Assembler’s Guide to... Factory Analytics: Unlocking Efficiency Through Data Insights' to whet your appetite.
Listen Up! The Intricacies of PCB Drilling Detailed in New Podcast Episode
04/25/2024 | I-Connect007In episode 5 of the podcast series, On the Line With: Designing for Reality, Nolan Johnson and Matt Stevenson continue down the manufacturing process, this time focusing on the post-lamination drilling process for PCBs. Matt and Nolan delve into the intricacies of the PCB drilling process, highlighting the importance of hole quality, drill parameters, and design optimization to ensure smooth manufacturing. The conversation covers topics such as drill bit sizes, aspect ratios, vias, challenges in drilling, and ways to enhance efficiency in the drilling department.
Elevating PCB Design Engineering With IPC Programs
04/24/2024 | Cory Blaylock, IPCIn a monumental stride for the electronics manufacturing industry, IPC has successfully championed the recognition of the PCB Design Engineer as an official occupation by the U.S. Department of Labor (DOL). This pivotal achievement not only underscores the critical role of PCB design engineers within the technology landscape, but also marks the beginning of a transformative journey toward nurturing a robust, skilled workforce ready to propel our industry into the future.
Winner of The Science Show Rakett 69 Receives Incap Scholarship
04/24/2024 | IncapThe winner of the Rakett 69 science show, Andri Türkson, who stood out as an electronics enthusiast, received a scholarship from Incap Estonia, along with an internship opportunity in Saaremaa.
Alternative Manufacturing Inc. Awarded QML Requalification to IPC J-STD-001 and IPC-A-610
04/24/2024 | IPCIPC's Validation Services Program has awarded an IPC J-STD-001 and IPC-A-610 Qualified Manufacturers Listing (QML) requalification to Alternative Manufacturing Inc (AMI).