MKS Instruments plans $5.28 billion term loan for Atotech buy

By Sara Rosenberg

New York, July 2 – MKS Instruments Inc. has received a commitment for a $5.28 billion seven-year senior secured covenant-lite term loan and a $500 million five-year revolving credit facility to help fund its acquisition of Atotech Ltd. and refinance its existing credit facilities, according to an 8-K filed with the Securities and Exchange Commission on Friday.

JPMorgan Chase Bank and Barclays are the joint lead arrangers and bookrunners on the deal. JPMorgan is the administrative agent.

As committed, pricing on the term loan is expected to be Libor plus 200 basis points, and pricing on the revolver can range from Libor plus 100 bps to 200 bps based on first-lien net leverage. Both tranches have a 0% Libor floor.

The term loan has 101 soft call protection for six months and amortization of 1% per annum.

The revolver has a commitment fee that can range from 25 bps to 37.5 bps based on first-lien net leverage.

Under the agreement, Atotech is being purchased for $16.20 in cash and 0.0552 of a share of MKS common stock for each Atotech common share. The equity value of the transaction is $5.1 billion, and the enterprise value is about $6.5 billion.

Other funds for the acquisition will come from cash on hand.

Estimated gross leverage will be under 4x, and net leverage will be under 3.5x.

Closing is expected in the fourth quarter, subject to Atotech shareholder approval, approval of the Royal Court of Jersey, regulatory approvals, and other customary conditions.

MKS is an Andover, Mass.-based provider of technologies that enable advanced processes and improve productivity. Atotech is a Berlin-based specialty chemicals technology company.

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