Applied Materials to merge with Tokyo Electron
APPLIED Materials, the world's largest chipmaking equipment supplier, agreed to acquire Tokyo Electron for $9.39bn (€7bn) in stock in the largest deal for a Japanese firm from outside the country in six years.
Gary Dickerson, who just became CEO of California-based Applied Materials this month, will be head of the combined company. Applied Materials shareholders will own 68pc of the new entity. Mr Dickerson, who replaced Mike Splinter as chief executive, is moving to consolidate the industry across continents as growth in the chipmaking equipment business slows. Applied Materials in August forecast revenue that missed analysts' estimates for the second straight quarter amid a record slump in the personal-computer market and muted semiconductor demand.
"It's a defensive strategy because R&D costs are going up and the number of customers is going down," said Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners. Equipment manufacturers are consolidating as production shifts toward semiconductors for mobile phones and tablet computers that require more advanced manufacturing equipment.
The offer values Tokyo Electron at 16.5 times EBIDTA, compared with the median of about 11 times for more than 60 similar deals, according to data compiled by Bloomberg. (Bloomberg)