Applied Materials to join forces with Tokyo Electron

Sep 24, 2013 - US-based Applied Materials Inc (NASDAQ:AMAT) will combine with Tokyo Electron Ltd (TYO:8035) to form a chip and display manufacturing technology group valued at USD 29 billion (EUR 21.5bn), the pair said today.

The US company offers equipment, services and software to producers of advanced semiconductor and flat panel display as well as solar photovoltaics (PVs). Among other products, Tokyo Electron also supplies PV panel production equipment on a global basis.

Under the terms of the agreement, the shareholders of the Japanese company will receive 3.25 shares of the new company for every Tokyo Electron share they own, while Applied Materials' investors will get one new share for every one they currently hold.

The transaction is pending both regulatory and stockholder approval and is seen to close in the middle or the second half of 2014. At that time, the stockholders of Applied Materials will hold about 68% in the new Netherlands-incorporated entity, while Tokyo Electron’s investors will own 32%.

The merger is anticipated to bring USD 250 million of annual run-rate operating synergies by the end of the first full financial year plus USD 500 million more in the third full fiscal year. The deal is also projected to be accretive to non-GAAP earnings per share at the end of the first full financial year.

(USD 1.0 = EUR 0.741)

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