Element Solutions Inc Announces Two Strategic Semiconductor Transactions

Element Solutions Inc (NYSE:ESI) ("Element Solutions" or the “Company”), a global and diversified specialty chemicals company, announced two transactions to enhance its capabilities and deepen customer relationships in advanced electronics materials markets. Together, these transactions represent approximately $15 million of annualized adjusted EBITDA with significant growth potential as electronics markets improve and certain new technologies win customer qualifications.

• Element Solutions has agreed to pay $185 million, net of estimated cash tax benefits, to Entegris, Inc. to terminate its long-standing distribution agreement for ViaForm electrochemical deposition products. These wafer level plating products for the world’s largest semiconductor fabricators are currently developed and manufactured by MacDermid Alpha Electronics Solutions, a business unit of Element Solutions, and have been distributed by Entegris under an evergreen distribution agreement. Following a transition period, Element Solutions will manage all aspects of the ViaForm product line in-house, which we believe will result in a more efficient supply chain and improved customer outcomes. The payment will be funded by a combination of cash on hand and an incremental $150 million borrowing under the Company’s senior credit facility.

• Element Solutions has acquired Kuprion, Inc., a developer of next-generation nano-copper technology to the semiconductor, circuit board and electronics assembly markets. The company’s ActiveCopper technology addresses the effects of thermal expansion and offers superior performance and reliability in a host of growth applications, including electric vehicles, high frequency 5G networks, IC substrate manufacturing, advanced packaging, mission critical aerospace and defense systems, and datacenters. This transaction has been structured with an upfront payment and potential earn-out payments based on milestones associated with product qualification and revenue over several years.

President and Chief Executive Officer Benjamin Gliklich said, “These transactions deepen our relationships and capabilities in compelling, long-term growth markets propelled by the proliferation of high-performance computing supporting artificial intelligence, industrial automation, and other emerging applications. The current weakness in the electronics sector represents an attractive opportunity to invest and position ourselves for the inevitable recovery. Entegris has been a solid long-term partner distributing our ViaForm technology. Over time, however, we both agreed that unified responsibility of all aspects of the product cycle - from innovation and manufacturing through to sales and support - would be best for our customers and the growth of the product line. These products are integral to semiconductor production at the largest fabricators in the world and strengthen our relationships and value-proposition to this important supply chain. The transaction is revenue growth, margin, and CRI (Cash Return on Investment) accretive and should increase the contribution of our Electronics segment to the Company’s annual adjusted EBITDA to over 70%. We thank Entegris and its legacy companies for their partnership over 20 years and for the strong commercial position they helped build. We look forward to providing an improved offering to our customers.”