The Performance Materials division comprises Merck’s entire specialty chemicals business. It offers high-tech performance chemicals for applications in fields such as consumer electronics, lighting, coatings, printing technology, plastics applications, and cosmetics. In the first quarter of 2014, Performance Materials contributed 15% to Group sales and 22% to EBITDA pre (excluding Corporate and Other). The EBITDA pre margin was 46.3% of sales. This reflects the far above-average profitability of the business.
Performance Materials consists of three business units: Liquid Crystals, Pigments & Cosmetics, and Advanced Technologies.
Liquid Crystals generates more than 70% of divisional sales. With a high market share, Merck has established itself as the global market and technology leader in liquid crystal mixtures. The market is highly consolidated. In addition, there are high barriers to market entry due to the technological complexity of liquid crystals and the high quality requirements of customers and consumers. The seven largest LC display manufacturers are among the customers of the Liquid Crystals business. Performance Materials has the broadest product offering in the industry and offers, among other things, liquid crystals based on PS-VA and IPS technologies. This enables the division to meet individual customer needs and offers solutions for all display sizes, from smartphones and tablet computers to large-area television screens. The division also manufactures and markets materials for organic light-emitting diodes (OLEDs), which are used in innovative lighting applications and display technologies.
Pigments & Cosmetics develops and markets a comprehensive product portfolio of effect and functional pigments, spanning a variety of colors and shimmer effects. The pigments are primarily processed into automotive and industrial coatings, plastics, printing, materials used in installations for renewable energy production, cosmetics, and counterfeit prevention applications. The product portfolio also includes high-quality cosmetic products for use in skin, hair and oral care, including UV filters.
By providing innovative research and development, the Advanced Technologies business unit bolsters the growth of the Liquid Crystals and the Pigments & Cosmetics business units.
On May 2, 2014, Merck announced the completion of the acquisition of AZ Electronic Materials. In December 2013 Merck reached an agreement with the Board of Directors of AZ concerning a cash offer amounting to around € 1.9 billion (approximately £ 1.6 billion). Subsequent to the achievement of the minimum acceptance rate of 75% and the granting of antitrust clearances in the United States, Japan, Taiwan, Germany and China, Merck will start the process of delisting AZ shares from the London Stock Exchange, which is expected to take place in early June. As of May 8, 2014, Merck’s shareholding in AZ increased to 97.9%. Merck will quickly being with the integration of AZ and its workforce of approximately 1,150 employees worldwide. All important integration activities are to be completed by the end of 2014.
With annual sales of around US$ 730 million in 2013, AZ is a leading supplier of high-tech materials with a production focus in Asia, where the company achieves nearly 80% of its sales. AZ generates more than 80% of its sales with products that are the leaders in their respective markets. Products from AZ are essential components of integrated circuits, flat-panel displays and light-emitting diodes. AZ is thus a key partner to leading global manufacturers of electronics since the chemical technologies AZ provides enable them to improve existing process and to develop innovative new products.