UpdateGermany's Merck extends AZ Electronic takeover offer

23 January 2014 12:54  [Source: ICIS news]

(updates with details of patent dispute between AZ Electronic and UP Chemical Co in paragraphs 7-11)

Merck KGaA headquarters in Darmstadt, Germany. (Image provided by in Merck KGaA)LONDON (ICIS)--Germany-headquartered chemicals and pharmaceuticals producer Merck said on Thursday that it has extended the takeover offer for AZ Electronic after acceptances for its £1.6bn cash bid undershot the necessary level by the first closing date.

Merck said that its 403.5 pence per share offer for the company had received acceptances equivalent to 39.8% of the Luxembourg-based specialties producer’s existing share capital by the first deadline of 22 January, far below the 95% threshold for the takeover to go through.

The bid price represents a 53% premium on AZ Electronic’s closing share price on 4 December, the day before the takeover bid was announced. The offer has been extended until 5 February, and the offer price has not been increased. Shares tendered in the offer so far include those held by the company’s directors, Merck added.

The acquisition of AZ Electronic, a producer of specialty chemicals for the electronics market, would allow Merck to increase its presence in the high-margin electronics space beyond the display industry, executive board chairman Karl-Ludwig Kley said at the time of the takeover announcement.

AZ Electronic produces materials used in integrated circuits, flat panel displays and light-emitting diodes.

The deal is subject to regulatory approval if the 95% offer threshold is met, Merck added. Goldman Sachs and UBS are acting as joint bookrunners on the deal, and the acquisition is being pursued through Merck 15. Allgemeine Beteiligungs-GmbH, an indirect wholly-owned subsidiary of Merck.

AZ Electronic also announced on Thursday that it intends to appeal a ruling by South Korea’s Patent Court regarding a patent dispute with local producer UP Chemical Co.

The company said in a filing that it has received oral confirmation that the court has found in favour of UP Chem after AZ Electronic accused the company of infringing on one of its patents.

AZ Electronic filed an action against the company in March 2012 regarding alleged infringement of a patent it holds relating to perhydropolysilazane dielectric technology, used in the manufacture of silicon wafers for integrated circuits.

UP Chem challenged AZ’s patent in a separate ruling at the Korean Intellectual Property Tribunal (IPT), which rejected the claim in January 2013 in favour of upholding AZ’s patent. UP Chem appealed the ruling to the Patent Court, which reversed the IPT’s decision and found in favour of the South Korean company.

AZ Electronic says that it intends to appeal the decision to the Korean Supreme Court.

By: Tom Brown
+44 208 652 3214

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