Newport To Be Acquired By MKS Instruments For A 50% Premium

MKS Instruments, Inc. MKSI, a provider of technology to enable advanced processes and improve productivity, announced on Tuesday it has entered into an agreement to acquire Newport Corp NEWP. MKS Instruments will pay $980 million, or $23.00 per share in cash to acquire Newport. The company plans on financing the acquisition through cash on hand and up to $800 million in debt. The combined entity will also commit to maintaining a "very strong balance sheet" with a combined pro forma net cash and investments on hand of approximately $425 million. Shares of Newport closed for trading at $15.04 on Monday, implying a roughly 50 premium to the $23 per share offer price. By mid-Tuesday afternoon, Newport's stock were trading at $22.76, up 51.33 percent while MKS Instruments' stock were trading lower by 4.76 percent at $32.01. MKS Instruments noted that the transaction is expected to be accretive to its non-GAAP net earnings and free cash flow during the first 12 months after the deal closes. In addition, the combined entity is expected to realize $35 million in annualized cost synergies within 18 to 36 months. "The combination of MKS Instruments and Newport Corporation creates a premier supplier of critical components and subsystems for a diverse set of growing end markets, each with a common need for highly precise technology enabling solutions," said Gerald Colella, MKS Instruments' Chief Executive Officer and President. "This acquisition is consistent with our strategy to pursue sustained profitable growth by expanding into adjacent markets while increasing our served addressable market in our core semiconductor business. Our shared customer requirements and complementary technologies together with our increased scale will enable us to lead in our served markets, deliver innovative and cost-effective solutions for our customers, and drive profitable growth." "This combination represents a great outcome for all of Newport's stakeholders," said Robert Phillippy, President and Chief Executive Officer of Newport Corporation. "The complementary nature of the two companies' technologies and customer base will create exciting opportunities for our employees, and enable the combined company to deliver innovative solutions to our customers. We look forward to working closely with the MKS Instruments team to ensure a smooth transition."