MKS Instruments Announces Agreement to Acquire Newport Corporation

MKS Instruments, Inc., a global provider of technologies that enable advanced processes and improve productivity, and Newport Corporation, a global provider of photonics solutions, announced that they have entered into an agreement for MKS Instruments to acquire Newport Corporation for $23.00 per share. The all-cash transaction is valued at approximately $980 million.

Newport Corporation is a global supplier of products and systems to customers in the scientific research, microelectronics, life and health sciences, industrial manufacturing and defense/security markets. Newport's solutions leverage its portfolio of lasers, photonics, motion equipment, and optical components and sub-systems, The Newport solutions portfolio is synergistic to MKS' portfolio of instruments, subsystems and process control solutions that measure, control, power, monitor and analyze parameters of manufacturing processes. Its products focus on pressure measurement and control, materials delivery, gas composition analysis, control and information technology, power and reactive gas generation, and vacuum technology. Primary served markets are manufacturers of capital equipment for semiconductor devices, and for other thin film applications including flat panel displays, solar cells, light emitting diodes, data storage media, and other coatings. This technology is also sold for manufacturing applications including medical equipment, pharmaceutical manufacturing, energy generation and environmental monitoring. 

The combined company is expected to have approximately $1.4 billion in pro forma annual revenue, based on the two companies' 2015 historical results. The transaction is expected to be accretive to MKS Instruments' Non-GAAP net earnings and free cash flow during the first 12 months post-closing. The combined company expects to realize $35 million in annualized cost synergies within 18 to 36 months and anticipates revenue synergies from the expansion of MKS Instruments' served addressable markets and leverage of complementary sales channels.

MKS Instruments intends to fund the transaction with a combination of available cash on hand and up to $800 million in committed debt financing. The combined company will maintain a strong balance sheet, with combined pro forma net cash and investments on hand of approximately $425 million.

The transaction has been approved by MKS Instruments' and Newport Corporation's board of directors and is subject to customary approvals, including regulatory and approval by Newport Corporation's shareholders, and is expected to close in the second quarter of 2016.

Keywords: Advanced Processes, Improve Productivity, Photonics Solutions, ARC Advisory Group.