Merck target AZ Electronic notes challenging conditions in 2013

18 February 2014 13:31  [Source: ICIS news]

LONDON (ICIS)--AZ Electronic Materials, a specialty chemicals company currently under a takeover offer from Germany-based producer Merck, said on Tuesday that its full-year pre-tax profit in 2013 had fallen 13% year on year as a result of a weak trading environment.

The London-listed, Luxembourg-based company, which produces specialty chemicals for the electronics market, said that its underlying pre-tax profit for the year stood at $112.6m, as a strong performance by its flat-panel display business was offset by weak IC Materials division revenue.

Specialising in products for use in integrated circuits, IC Materials division revenue was down 6% year on year in constant currencies, the company said.

Full-year revenue was down 8% year on year at $730.3m in actual currency terms, and earnings before interest, taxes, depreciation and amortisation (EBITDA) was down 12% at $221.9m, the company added.

“In the near term, we anticipate a continuation of the challenging trading conditions experienced in 2013,” the company said in a filing.

AZ Electronic has been under offer from Merck since December 2013, when Merck announced it intended to acquire the company for £1.6bn following a unanimous recommendation of the offer by AZ’s board of directors.

Holders of at least 95% of AZ Electronic stock need to tender their shares for the deal to go through. Merck announced in late January that the window for acceptance of the bid was to be extended after insufficient shareholders had agreed to the deal by the deadline. Merck said 39.8% of AZ Electronic shareholders had agreed to the deal at the time.

The offer window was extended again on 6 February, and again on 14 February, at which point the company said it had received acceptance from stakeholders representing 53.37% of AZ Electronic’s issued share capital.

Merck said that the deadline for acceptance now stands at 28 February, to allow for the timetable of the regulatory process in China for review of antitrust filings. The date falls on the last day of the first phase of China’s Ministry of Commerce’s review period for scrutiny of the deal.

A successful acquisition of AZ Electronic would allow Merck to expand into the high-margin electronics space beyond its existing foothold in the display industry, according to executive board chairman Karl-Ludwig Kley.

By: Tom Brown
+44 208 652 3214

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