Lam Research, KLA-Tencor Shares Fall Amid Deal Status Concerns
August 10 2016 - 3:50PM
Dow Jones News
Lam Research Corp. and KLA-Tencor Corp. said they may not obtain
all the needed approvals from antitrust regulators in time to
complete their merger plan by their target date of Oct. 20.
Shares of both semiconductor-manufacturing equipment makers fell
Wednesday as the companies said they remain in talks with
regulators in the U.S., Korea, Japan and China, but provided few
details about their progress or what they plan to do if they don't
receive the needed clearances by the October date.
Shares of Lam Research fell 5.2% to $88.44 and KLA-Tencor shares
dropped 11% to $69.21 in afternoon trading Wednesday.
At first glance, any opposition to the merger on antitrust
grounds would seem surprising, as the two companies dominate
different segments of the market for machines used to make
chips.
Lam is the biggest seller of tools to etch away materials from
silicon wafers as part of the manufacturing process. KLA-Tencor is
the leader in a different series of steps, offering machines to
help inspect and measure chips to check for defects.
But Dan Hutcheson, an analyst at VLSI Research, said concerns
could be raised if one company controlled both categories of
equipment. Lam, for example, could obtain information from
KLA-Tencor tools about defects or other aspects of the production
process not available to its competitors, he said.
Slowing growth and rising costs drove a historic wave of
consolidation in the semiconductor industry that kicked into high
gear last year and has continued this year.
In October, Lam Research unveiled a deal, initially valued at
rough $10.6 billion, for rival KLA-Tencor that would create a
combined company with $8.7 billion in annual revenue.
The move followed the cancellation in April of Applied Materials
Inc.'s plan to buy the Japanese company Tokyo Electron Corp., after
the Justice Department raised antitrust objections to the
transaction. That deal, announced in September 2013, was expected
to create a company with a market value of $29 billion.
In May, Lam Research and KLA-Tencor received a second request
for information from the Justice Department. The notice is a fairly
standard request as the agency explores competitive concerns but
serves to delay the deal's closing.
Write to Tess Stynes at tess.stynes@wsj.com and Don Clark at
don.clark@wsj.com
(END) Dow Jones Newswires
August 10, 2016 15:35 ET (19:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
KLA (NASDAQ:KLAC)
Historical Stock Chart
From Aug 2024 to Sep 2024
KLA (NASDAQ:KLAC)
Historical Stock Chart
From Sep 2023 to Sep 2024