MKS Instruments (www.mksinst.com), a global provider of technologies that enable advanced processes and improve productivity, announced the completion of its previously announced acquisition of all of the issued and outstanding common shares of Electro Scientific Industries, Inc. (“ESI”), an innovator in laser-based manufacturing solutions for the micro-machining industry, for $30.00 per share, or approximately $1 billion.
MKS funded the transaction with a combination of available cash on hand and proceeds from a seven-year $650 million secured term loan, which was priced at 99% of par. The interest rate on the term loan is a floating rate based upon LIBOR plus 2.25%. The term loan was rated BB+ by S&P and Ba1 by Moody’s.
MKS anticipates achieving an estimated $15 million in annualized cost synergies within 18 to 36 months following the closing of the acquisition.
“We’re excited by the combination of MKS and ESI, as we expect it to broaden our position in key industrial end markets with complementary solutions while expanding our total addressable market by $2.2 billion,” said Gerald Colella, MKS’ Chief Executive Officer.
“We anticipate that this combination will enhance our Surround the WorkpieceSM offerings, expand our solutions for Advanced Markets and accelerate our innovation. We plan to leverage component and systems expertise to provide rich and robust solutions to meet the challenges of our customers’ evolving technology needs.”
“This transaction demonstrates our commitment to driving shareholder value,” said Seth Bagshaw, Chief Financial Officer. “We look forward to beginning our integration work with the ESI team and believe that by applying the MKS business process, we will be able to achieve our growth and profitability goals as a combined company. Moreover, we remain committed to maintaining a robust capital structure to reduce indebtedness, as we have successfully achieved following our acquisition of Newport Corporation.”
Lazard acted as financial advisor and Barclays acted as financial advisor and lead arranger and HSBC acted as arranger for the term loan financing.
by Hordon Kim