ATMI: The End of an Era

12-inch semiconductor wafer Source:  Wikipedia
12-inch semiconductor wafer
Source: Wikipedia

This week, ATMI,  Inc. (ATMI:  Nasdaq) announced that it was being acquired by Entegris, Inc.  (ENTG:  Nasdaq).  Upon learning of the merger, these words kept echoing through my mind:

This is the way the world ends. 
This is the way the world ends. 
Not with a bang but a whimper.  [1]

Let me explain:  ATMI was my favorite client, by far, in my career as an investment banker.  The smartest, most creative, liveliest and driven men (yes, all men) that I have ever dealt with.  The team was ATMI’s great strength.  I don’t think I’ve ever had as much fun with, or been prouder of my association and our accomplishments with any other company.

First, who is ATMI?  What do they do?  The ATMI I knew was a semiconductor materials [think consumables and recurring revenue] company based in Danbury, Connecticut.  My first memory of the Company is visiting a handful of people working away furiously in an abandoned gas station on Route 7.  This was ATMI’s  “startup garage” and its intergalactic headquarters.  The startup team included Gene and Phyllis Banucci, Duncan Brown, . . .  and more PhD’s than one can throw a stick at.  Dan Sharkey, who was the CFO, and integral member of the team, was the lone non-holder of a PhD, joined a few years later.  Normally, I discount the productivity of PhD’s, but these guys made it work.  Novel products, unfair competitive edge.

The company was founded in 1986, and went public in 1993.  The IPO was a saga.  Hard, grind it out work.  The book wasn’t coming together, but was achingly close.  We were on the road in a lousy market, and building the book was hard.  Damn hard.  We gave it one last day.  It was either going to happen or not.  The boyz went down for a one-on-one to Oppenheimer Capital, in the canyons of downtown Manhattan.  Back in the office, as the group was coming back, word came that OpCo would buy whatever was available.  The deal was done.  Tenterhooks.  About as much drama as one ever has in a public offering.

We, ATMI and my firm at the time, went through several follow-on financings, acquisitions and divestitures over the next few years.  I left the firm, ATMI grew away from my prior firm, and management changed.  Two of the strongest collaborators left:  Gene felt it was time for new leadership, and Duncan Brown headed up the Japan effort from La Jolla, and later left the company.

Somehow, the magic disappeared.  And it manifested itself in stagnant ROE and share price.

The new management, for whatever reason, and I’m sure there are many, couldn’t get the magic back. The Company made acquisitions and made divestitures.  But nothing really took hold.

Recently, the Company had decided to focus, and divest its life sciences division.  That divestiture was announced in January of this year, with the sale of the division to Pall Corporation for $185 million.  But the restructuring work was not done.  There was no clear path for ATMI to prosperity.  So the board of directors decided to fold their hand, and sell the company.

Entegris is involved in semiconductor materials, so this is a natural acquisition.  Entegris is a recent phenomenon.  It was incorporated in Minnesota in 1999 as part of a consolidation of Fluoroware, Inc. and Empak, Inc. Fluoroware was founded in 1966 and Empak has been in business since 1980.

Entegris is headquartered in Billerica, although originally based in Minnesota, with operations around the globe.  ATMI is still headquartered in Danbury.  So, the melding of the two companies should go smoothly.

The value of the ATMI acquisition is $1.15 billion, in cash.   Entegris’ base metrics are around $700m per year in sales, and $62m in net income, including extraordinary items for the trailing 12 months.  The entity’s combined sales and net income should be roughly $1.1 billion and $100 million.

Will be interesting to watch . . .

Margaret Johns

Chairman & Managing Director
BlueLake Partners, LLC

 


[1] TS Elliot, The Hollow Men

In researching this blog, I came across an annotated version of The Hollow Men.  Enjoy:

http://aduni.org/~heather/occs/honors/Poem.htm

The Hollow Men

1925

Mistah Kurtz- he dead.

The Hollow Men

A penny for the Old Guy

I
We are the hollow men
We are the stuffed men
Leaning together
Headpiece filled with straw. Alas!
Our dried voices, when

5

We whisper together
Are quiet and meaningless
As wind in dry grass
Or rats’ feet over broken glass

10

In our dry cellar
Shape without form, shade without colour,
Paralysed force, gesture without motion;
Those who have crossed
With direct eyes, to death’s other Kingdom
Remember us – if at all – not as lost

15

Violent souls, but only
As the hollow men
The stuffed men.
II
Eyes I dare not meet in dreams
In death’s dream kingdom

20

These do not appear:
There, the eyes are
Sunlight on a broken column
There, is a tree swinging
And voices are

25

In the wind’s singing
More distant and more solemn
Than a fading star.
Let me be no nearer
In death’s dream kingdom

30

Let me also wear
Such deliberate disguises
Rat’s coat, crowskin, crossed staves
In a field
Behaving as the wind behaves

35

No nearer –
Not that final meeting
In the twilight kingdom
III
This is the dead land
This is cactus land

40

Here the stone images
Are raised, here they receive
The supplication of a dead man’s hand
Under the twinkle of a fading star.
Is it like this

45

In death’s other kingdom
Waking alone
At the hour when we are
Trembling with tenderness
Lips that would kiss

50

Form prayers to broken stone.
IV
The eyes are not here
There are no eyes here
In this valley of dying stars
In this hollow valley

55

This broken jaw of our lost kingdoms
In this last of meeting places
We grope together
And avoid speech
Gathered on this beach of the tumid river 

60

Sightless, unless
The eyes reappear
As the perpetual star
Multifoliate rose
Of death’s twilight kingdom

65

The hope only
Of empty men.
V
Here we go round the prickly pear
Prickly pear prickly pear
Here we go round the prickly pear

70

At five o’clock in the morning.
Between the idea
And the reality
Between the motion
And the act

75

Falls the Shadow
For Thine is the Kingdom
Between the conception
And the creation
Between the emotion

80

And the response
Falls the Shadow
Life is very long
Between the desire
And the spasm

85

Between the potency
And the existence
Between the essence
And the descent
Falls the Shadow

90

For Thine is the Kingdom
For Thine is
Life is
For Thine is the
This is the way the world ends

95

This is the way the world ends
This is the way the world ends
Not with a bang but a whimper.