Cabot Microelectronics Corp. CCMP, -7.04% has agreed to acquire KMG Chemicals Inc. KMG, +15.35% in a cash and stock deal with an enterprise value of about $1.6 billion, the companies said in a joint statement Wednesday. KMG shareholders will receive $55.65 in cash and 0.2000 of a share of Cabot's common sock, equal to 479.50 based on the volume weighted average closing price of Cabot Microelectronics common stock over the 20-day trading period ended on August 13. The deal is expected to close near year-end and to create a company with annual revenue of about $1 billion and about $320 million of earnings before interest, taxes, depreciation and amortization, or EBITDA. Cabot will become one of the leading suppliers of consumable materials to the chip industry. The deal is expected to significantly boost free cash flow and adjusted per-share earnings in the first year after completion. Shares of both companies were halted premarket for the news.
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