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Applied Materials, Tokyo Electron announce merger

Posted: 26 Sep 2013     Print Version  Bookmark and Share

Keywords:Applied Materials  Tokyo Electron  merger 

Applied Materials Inc., the world's largest chipmaking equipment supplier, and Tokyo Electron Ltd., ranked No. 3, have agreed to a merger that values the combined entity at about Rs.1.82 lakh crore ($29 billion). Under the deal, Applied Materials will buy Tokyo Electron for about Rs.58,490.57 crore ($9.3 billion).

The deal aims to create a new combined entity with a shared leadership team that is 68 per cent owned by Applied Materials shareholders and 32 per cent by Tokyo Electron shareholders.

Applied Materials Chief Gary Dickerson will serve as Chief Executive Officer of the combined company, while Tokyo Electron Chief Executive Tetsuro Higashi will become chairman of the new entity.

"The new company will have a new name, dual headquarters in Tokyo and Santa Clara, a dual listing on the Tokyo Stock Exchange and the NASDAQ, and will be incorporated in The Netherlands," Applied Materials said in its release.

Gary Dickerson, President and CEO of Applied Materials, said, "We are creating a global innovator in precision materials engineering and patterning that provides our new company with significant opportunities to solve our customers' high-value problems better, faster and at lower cost."

The deal will produce a clear No.1 company in the sale of a range of equipment for precision engineering and patterning for integrated circuits and displays, with about 25 per cent market share. Applied Materials led the market in 2012 with about Rs.34,654.09 crore ($5.51 billion) in sales and 14.4 per cent market share, according to a April 2013 report from market researcher Gartner Inc. Tokyo Electron was third, with Rs.26,540.88 crore ($4.22 billion) in sales and 11.1 per cent share. ASML had sales in 2012 of Rs.30,754.72 crore ($4.89 billion) and a 12.8 per cent market share, Gartner said.

This combination has been unanimously approved by the Boards of Directors of both companies. The closing of the transaction is subject to customary conditions, including approval by Applied Materials' and Tokyo Electron's shareholders and review by regulators. The companies expect the transaction to close in mid to second half of 2014.

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