FRANKFURT (Reuters) – German drugs and lab supplies maker Merck KGaA offered $5.9 billion, including debt, for Versum Materials, in a cash deal that tops an offer from U.S. rival Entegris, as both seek to boost their electrochemicals operations.

Shares in electronic materials maker Versum soared 18.7 percent to close at $49.13 on Wednesday, while shares in Merck lost 4.2 percent and Entegris fell 2.7 percent.

Merck said it planned to buy Versum for $48 per share – or $5.2 billion excluding debt – for a premium of 16 percent to Tuesday’s closing price and of 52 percent to the share price before Entegris’ offer.

Entegris announced a $4 billion all-stock deal in January, saying it wanted to create a big chemical supplier to the semiconductor market at a time when the industry is under pressure.

Versum said in a statement on Wednesday that it “continues to believe in the strategic and financial rationale of the proposed merger of equals with Entegris,” but its advisers will also thoroughly review the Merck proposal.

Entegris’ combination with Versum “is highly complementary and strategically compelling”, Entegris Chief Executive Bertrand Loy said in a statement.

Shares in Versum, spun off from Air Products in 2016, fell 27 percent in 2018 as demand for microchips used in smartphones and other personal devices plateaued and a decade-long rally in U.S. stock markets wobbled.

Merck is building a high-tech chemicals division, called Performance Materials, that caters to the electronics industry and will complement its shrinking liquid crystals business.

The liquid crystals business used to enjoy operating income margins of 40-50 percent but is now under pressure from Chinese rivals.

Merck has said Performance Materials would return to growth in 2020, thanks to restructuring measures.

Family controlled Merck is diversified across three separate businesses, including a healthcare unit, which stems from a collaboration deal with GSK, and a life science division that makes supplies and gear for biotech labs.

To bolster its Performance Materials division, Merck in 2014 bought Britain’s AZ Electronic Materials for 1.9 billion euros.

Merck said it was ready to proceed immediately to due diligence and to quickly agree a deal, adding it did not need its own shareholders to approve a transaction.

“The transaction that Versum recently disclosed significantly undervalues Versum,” Merck Chief Executive Stefan Oschmann said in a letter to Versum’s board of directors.

“Instead of the speculative value offered by the Entegris transaction, the all-cash proposal would deliver immediate and certain cash value to Versum stockholders and employees”, he added.

The proposed deal would value Versum at 13.3 times its 2018 earnings before interest, tax, depreciation and amortisation, Oschmann said, adding he anticipated no regulatory problems.

Merck expects the deal, which it said will reap cost synergies of about 60 million euros annually, to close in the second half of 2019.

Merck is working with the bank Guggenheim and the law firm Sullivan Cromwell on the deal, which a spokesman said was fully financed with equity and debt and has not yet been discussed with Versum.

Merck has been flush with cash since the sale of its consumer health unit to Procter & Gamble for 3.4 billion euros last year.