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(i) the names of the merger parties;
(a) Entegris, Inc. (“ENTG”)
(b) CMC Materials, Inc. (“CCMP”)
collectively, the (“Parties”).
(ii) a description of the transaction;
The application relates to the proposed acquisition by ENTG of all shares of CCMP. ENTG will acquire CCMP in a cash and stock transaction with an enterprise value of approximately USD6.5 billion, (the “Proposed Transaction”).
(iii) a description of the business activities of the merger parties worldwide and in Singapore;
ENTG
ENTG is a global developer, manufacturer and supplier of microcontamination control products, specialty chemicals and materials handling solutions for manufacturing processes in the semiconductor and other technology industries. ENTG’s business is organized into three operating segments: (1) Specialty Chemicals and Engineered Materials; (2) Advanced Materials Handling; and (3) Microcontamination Control.
ENTG effectively engages in the same businesses in Singapore as it does globally.
CCMP
CCMP is a global supplier of consumable materials to semiconductor manufacturers and pipeline companies. CCMP’s business is organized in two operating segments: Electronic Materials and Performance Materials.
CCMP effectively engages in the same businesses in Singapore as it does globally.
(iv) a description of the overlapping goods or services, including brand names;
The Parties submit that ENTG and CCMP overlap in Singapore in the supply of: (a) Chemical Mechanical Planarization (“CMP”) Slurries, which is used in the semiconductor manufacturing industry only; and (b) cleaning solutions (“Cleans”), which is used principally in the semiconductor manufacturing process but can also be used in adjacent industries that have similar manufacturing processes (e.g., manufacture of flat panel displays, hard disk drives and photovoltaics).
For completeness, CCMP supplies CMP pads whereas ENTG only occasionally resells a de minimis amount of CMP pads manufactured by others, per customers’ special request and not as part of active sales or marketing. CMP pads are used in the semiconductor manufacturing industry only. Hence, the Parties do not regard CMP pads to be an overlapping good, given the de minimis resale by ENTG. Furthermore, customers could choose to purchase the CMP pads from the original supplier instead of obtaining them from ENTG.
(v) a description of substitute goods or services;
The Parties submit that substitute products are supplied by a range of other suppliers globally and in Singapore.
(vi) the applicant’s views on:
a. definition of the relevant market(s);
The Parties submit that the relevant markets are:
(a) the global provision of CMP Slurries;
(b) the global provision of Cleans;
b. the way in which competition functions in this market;
The Parties submit that, on the demand side, customer choices are primarily driven by value, quality, and service level.
c. barriers to entry and countervailing buyer power; and
The Parties submit that the barriers to entry and/or expansion into the relevant markets are low, given that there are no factors such as planning restraints, technology, research and development requirements, regulatory barriers, import restrictions and IP rights that would restrict entry into the market. There are also a large number of upstream raw materials suppliers to choose from, and thus the availability of raw materials will not restrict new market entry.
Customers are large integrated device manufacturers, foundries, and original equipment manufacturers who generally run highly sophisticated bidding processes to procure the relevant products. Importantly, most market players have multi-product relationships with their customers, which gives customers considerable leverage to continue to drive down prices and extract higher service levels across products.
d. the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).
Non-coordinated effects
The Parties submit that non-coordinated effects will not arise in the relevant markets as the Parties will continue to face intense competitive restraints from various existing strong and significant competitors, as well as additional competitive constraint from new and potential entrants, after the Proposed Transaction. In addition, the Parties are facing and will continue to face significant countervailing buyer power from customers.
Coordinated effects
The Parties submit that coordinated effects will not arise in the relevant markets as each market is fragmented and highly competitive and face low barriers to entry and expansion. The customers also have significant bargaining power and multi-product relationships with their suppliers. These make coordination as well as the monitoring of any potential alignment difficult and makes any hypothetical coordination unsustainable.
Vertical effects
The Parties submit that ENTG also supplies globally small amounts of liquid containers (also known as “drums”) and liquid filters, each of which constitutes a product market that is global in geographic scope, to downstream customers for fluid transport and handling as well as chemical manufacturing, including to CCMP. Given the small presence of ENTG in the highly fragmented drums as well as liquid filters markets globally and the small amount of sales between the Parties, amongst others, the combined entity lacks the ability or incentive to foreclose competitors on either the upstream or the downstream markets, either globally or in Singapore.
Conglomerate effects
The Parties submit that CCMP also supplies CMP pads globally, which constitutes a product market that is global in geographic scope. CMP pads are also used in the semiconductor manufacturing process. The Parties submit that the Proposed Transaction would not give rise to any conglomerate effect concerns with regard to CMP pads for the following reasons:
(a) The overlapping products and CMP pads are not sold together in bundles. With respect to CMP Slurries and CMP pads, although they are both used within the CMP process, they are not sold together in bundles, but instead are sold as individual products. With respect to Cleans and CMP pads, they are also not sold as bundles, particularly because Cleans can be used outside of the CMP process and in adjacent industries;
(b) Strong competition from other suppliers, which also have multi-product relationships with their customers; and
(c) CCMP’s modest market share in CMP pads.
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