AZ share price jumps more than 50% on Merck takeover bid

on Dec 5, 2013
Updated: Oct 21, 2019
Listen, Thursday, December 5: Shares in AZ Electronic Materials Group (LON:AZEM) surged by more than 50 percent this morning after German drugs and chemicals group Merck KGaA (ETR:MRK) announced a £1.57 billion takeover bid for the producer of specialty chemical materials for the electronics market. The boards of the two companies have reached an agreement over the terms of the offer, under which Merck is offering 403.5p in cash per AZ share, a premium of 53 percent on yesterday’s closing price. The premium over AZ’s three-month volume weighted average price is equal to 41 percent. AZ’s share price reacted immediately, opening 52.1 percent higher at 400p. The stock traded at 398.5p as of 10:35 UTC, up 51.6 percent from yesterday’s close. AZ, whose chemicals are widely used in semiconductor devices, flat panel displays, light-emitting diodes, and photolithographic printing, floated on the London Stock Exchange in October 2010 with an IPO price of 240p. The Asia-focused company, which also has operations in Europe and the US, reported EBITDA of $262.4 million on revenue of $793.9 million for 2012.

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Merck’s share price also rose on the news, making the company the biggest gainer in the German blue chip DAX index this morning. Merck’s shares were up 3.3 percent at an all-time high of €128.55 as of 10:23 UTC in Frankfurt, compared to a 0.07 percent rise in the DAX.

Karl-Ludwig Kley, Chairman of the Executive Board of Merck, which also manufactures high-tech chemicals along with drugs, biopharmaceutical products, and life science tools, commented: “With this strategic move we are strengthening the portfolio of Merck by adding a premium business to our existing business of high-margin specialty chemicals. AZ complements our existing activities in the display industry by adding attractive electronics chemicals with a similar business model based on customer proximity and a high level of innovation. The combination will enable Merck to access additional growth areas in the electronics industry to benefit even better from the increasing demand for electronic devices beyond displays.”

Merck plans to fund the acquisition from its existing cash and cash equivalent resources. The deal is subject to a number of conditions, including a minimum acceptance level of 95 percent of AZ’s share capital and approval by the relevant competition authorities.
**As of 10:25 UTC buy AZ Electronic Materials shares at 328.80p.**
**As of 10:25 UTC sell AZ Electronic Materials shares at 328.50p.**
**As of 10:25 UTC buy Merck shares at €128.60.**
**As of 10:25 UTC sell Merck shares at €128.55.**


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