* Merck makes $53/shr deal proposal, up from $48
* Versum describes offer as superior to Entegris merger deal
* Entegris says won't sweeten its offer
* Entegris would be eligible for $140 mln termination fee
* Consolidation move in the semiconductor materials market (Adds Entegris comment, Merck deal logic)
By Ludwig Burger
FRANKFURT, April 8 (Reuters) - Merck KGaA won the backing of Versum's board for a sweetened $6.5 billion takeover proposal, overturning an agreed merger with rival Entegris as it bets on a recovery in electronic materials markets.
"This proposal constitutes a 'Superior Proposal' as defined in Versum's previously announced merger agreement with Entegris, Inc.," Versum said in a statement on Monday.
On a per share basis, Germany's Merck offered $53, up from $48 previously, after reviewing business data and following meetings between Merck Chief Executive Stefan Oschmann and Versum Chairman Seifi Ghasemi, filings showed.
Entegris stepped back from the contest, saying it would not improve the terms of the all-share merger signed in January, which would have seen Versum investors receive $42.43 worth of Entegris stock for each Versum share.
Versum will owe its jilted partner $140 million in termination fees if it hammers out a final deal to be bought by Merck, filings showed. Versum shares were up 1 percent at $51.70 at 1430 GMT, on track for a record closing high.
Versum, the former specialty chemicals division of industrial gases group Air Products, had previously rejected Merck's overture, saying it was committed to the merger agreed with Entegris, also a supplier of materials for semiconductor production.
Merck, a diversified healthcare and chemicals group, last month launched a hostile all-cash takeover offer to Versum shareholders - with a price tag of $5.9 billion including debt - as the German pharma group looks to boost its presence in the semiconductor materials market.
Merck's swoop has been viewed by some analysts as seizing on beaten down stock prices in the volatile semiconductor industry after demand for mobile devices slowed and prices for memory chips sank.
Merck, whose shares were up 0.3 percent, is seeking to further boost its high-tech chemicals division to supply more to the electronics industry, following the $2.6 billion purchase of Britain's AZ Electronic Materials in 2014.
At the heart of Merck's chemicals division is a business making liquid crystals for flat screens, which has previously achieved operating income margins of 40-50 percent but is now suffering shrinking sales under intense pressure from Chinese rivals.
Based on about $700 million in assumed Versum debt and about 109 million shares, the increased Merck offer would be worth close to $6.5 billion.
Additional reporting by Saumya Sibi Joseph in Bengaluru; Editing by Anil D'Silva/Keith Weir