WooKyu Kim, left, managing director of Merck Korea, poses with Lee Jae-jung, chairman and CEO of Mecaro after signing to acquire the latter's chemical business at Mecaro's business site in Eumseong, North Chungcheong Province, Wednesday. Courtesy of Merck Korea

By Baek Byung-yeul

German multinational science and technology company, Merck, acquired the chemical business of Korean chip material maker, Mecaro, as part of its bid to strengthen the line-up of materials used for semiconductor production, its Korean unit said Wednesday.

"The acquisition is part of the Level Up growth program of Merck's electronics business sector, which includes investments of significantly more than 3 billion euros ($3.05 billion) from 2021 to 2025 in innovation and capacities and focuses on four, mutually reinforcing key priorities ― scale, technology, portfolio, as well as capabilities," Merck said in a statement.

The company said the acquisition cost 110 million euros. "The transaction consideration comprises an upfront cash payment of 75 million euros, plus contingent milestone payments of up to 35 million euros, totaling an aggregate transaction value of up to 110 million euros. The transaction is expected to be closed in Q4 2022 and is subject to regulatory clearance as well as the satisfaction of other customary closing conditions," Merck said.

Merck said Mecaro's chemical business comprises about 100 employees and primarily develops and produces precursors used in the thin film deposition process of chip-manufacturing. Thin film deposition is a process of coating a thin film of 1-micrometer on a semiconductor wafer. The process is required to impart electrical properties onto a semiconductor.

The German multinational company is a leading chemical company that supplies materials needed to produce semiconductors and displays to global manufacturers. With the acquisition, Merck is expected to expand its supply of high-valued precursor products.

Under the agreement, Merck will secure Mecaro's production facility in Eumseong, North Chungcheong Province and R&D center in Daejeon.

"In acquiring this portion of Mecaro's business, we will continue to expand a key segment of our semiconductor solutions portfolio. Simultaneously, we are building on our localization efforts and gaining a state-of-the art production facility in Eumseong and an R&D lab in Daejeon, both supporting our capacity expansion plans. These turnkey spaces will be one of the crucial elements in executing our Level Up investments in Korea," said Kai Beckmann, member of the executive board of Merck and CEO of electronics operations.