FREMONT, Calif. and
MILPITAS, Calif., Oct, 21, 2015
/PRNewswire/ -- Lam Research Corporation (Nasdaq: LRCX)
("Lam") and KLA-Tencor Corporation (Nasdaq: KLAC) ("KLA-Tencor")
today announced that they have entered into a definitive agreement,
unanimously approved by the boards of directors of both companies,
for Lam Research to acquire all outstanding KLA-Tencor shares in a
cash and stock transaction.
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KLA-Tencor stockholders will be entitled to elect to receive for
the shares of KLA-Tencor stock they hold the economic equivalent of
$32.00 in cash and 0.5 of a share of
Lam Research common stock, in all-cash, all-stock, or mixed
consideration, subject to proration as more fully described in the
merger agreement. The transaction values KLA-Tencor at
approximately $67.02 per share, or
$10.6 billion in equity value based
on the closing stock price of Lam on October
20, 2015.
This combination will create unmatched capability in process and
process control, delivering optimized results in partnership with
its customers by reducing variability and accelerating yield,
ultimately helping the semiconductor industry extend Moore's Law
and performance scaling generally.
The combined company will have approximately $8.7 billion in pro forma annual
revenue1. The transaction is expected to be accretive to
Lam's non-GAAP earnings and free cash flow per share during the
first 12 months post-closing. The combined company expects to
realize $250 million in annualized
cost synergies within 18 to 24 months of closing and anticipates
generating approximately $600 million
in incremental annual revenue by 2020 through improved
differentiation of each company's products and creation of new
capabilities.
"The pairing of Lam Research and KLA-Tencor brings industry
leadership in process and process control together, accelerating
our capability to address our customers' most difficult challenges
as they scale to meet the market demands of lower power, higher
performance, and smaller form factors," said Martin Anstice, Lam's president and chief
executive officer. "Lam Research and KLA-Tencor's shared commitment
to collaboration and building strong customer trust, along with our
respective track records of innovation, product leadership, and
operational excellence, position us as a combined company to
deliver the higher levels of technology differentiation and speed
to solutions that are critical to our customers' long-term
success."
"I strongly believe that this transaction represents a great
outcome for all of KLA-Tencor's key stakeholders," said
Rick Wallace, president and chief
executive officer of KLA-Tencor. "The combined company will be
uniquely positioned to work collaboratively with our customers to
help them meet the challenges of FinFET, multi-patterning and 3D
NAND development. Given the complementary nature of the two
companies' product offerings and technologies as well as the lack
of product overlap, the combination will create an industry leader
with greater opportunities for our respective employees for
professional development and growth. Lastly, this transaction will
benefit our stockholders who will receive compelling upfront value,
in addition to the opportunity to own a meaningful stake in an
industry leader and participate in the upside potential created by
the combination."
Compelling Strategic and Financial Benefits
- Creates Premier Semiconductor Capital Equipment Company:
Strengthened platform for continued outperformance, combining Lam's
best-in-class capabilities in deposition, etch, and clean with KLA-
Tencor's leadership in inspection and metrology
- Accelerates Innovation: Increased opportunity and
capability to address customers' escalating technical and economic
challenges
- Broadens Market Relevance: Comprehensive and
complementary presence across market segments provides diversity,
scale and value creating innovation opportunities
- Significant Cost and Revenue Synergies: Approximately
$250 million in expected annual
on-going pre-tax cost synergies within 18-24 months of closing the
transaction, and $600 million in
annual revenue synergies by 2020
- Accretive Transaction: Increased non-GAAP EPS and free
cash flow per share during the first 12 months post-closing
- Strong Cash Flow: Complementary memory and logic
customer base, operational strength, and meaningful installed base
revenues strengthen cash generation capability Anstice concluded,
"We have tremendous respect for the company KLA-Tencor employees
have built over nearly 40 years — their culture, technology, and
operating practices. I have no doubt that our combined values,
focus on the customer, and complementary technologies will create a
trusted leader in our industry, capable of creating significant
opportunity for profitable growth and in turn delivering tremendous
value to all of our stakeholders. This is the right time for the
right combination in our industry."
Transaction Terms and Approvals Required
Under the
terms of the definitive agreement, Lam will acquire KLA-Tencor for
approximately $5.0 billion in
aggregate cash consideration and approximately 80 million shares of
Lam common stock, valued at approximately $5.6 billion as of October
20th, 2015. KLA-Tencor stockholders are expected
to own approximately 32% of the combined company on a pro forma
basis.
Each KLA-Tencor stockholder may elect to receive, for all shares
of KLA-Tencor common stock they hold at the closing of the
transaction, and on a per share basis, one of the following: mixed
consideration, consisting of both (i) 0.5 of a share of Lam
Research common stock and (ii) $32.00
in cash; all-stock consideration, consisting of a number of shares
of Lam Research common stock equal to (i) 0.5 plus (ii)
$32.00 divided by the volume weighted
average price of Lam Research common stock over a five trading day
period ending shortly before the closing of the transaction ("the
five day VWAP"); or all-cash consideration, consisting of (i)
$32.00 plus (ii) 0.5 times the five
day VWAP. KLA-Tencor stockholders who do not make an election will
be deemed to have elected the mixed consideration. All-cash and
all-stock elections will be subject to proration in accordance with
the terms of the merger agreement. The stock component of the
consideration is expected to represent a tax-free exchange to
KLA-Tencor stockholders.
Lam intends to fund the cash consideration for the transaction
and repayment of KLA-Tencor's currently outstanding term loan using
approximately $1.9 billion of cash on
hand from the combined companies and approximately $3.9 billion in debt financing. The company
intends to provide a direct, unconditional guarantee of
KLA-Tencor's senior notes upon the closing. Lam has obtained
commitment for $4.2 billion of bridge
financing for the transaction from Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC.
Lam is committed to maintaining its investment grade rating. The
transaction is not subject to financing.
The transaction is expected to close in mid-calendar year 2016,
pending the receipt of customary regulatory approvals. In addition,
the transaction is subject to customary closing conditions,
including the adoption by KLA-Tencor's stockholders of the merger
agreement and the approval by Lam Research's stockholders of the
issuance of shares in the transaction. Given their complementary
product lines and the significant industry benefits the transaction
will enable, the companies believe that they will be able to obtain
the requisite regulatory approvals on a timely basis.
Company, Management and Board of Directors
The
combined company will use the name Lam Research Corporation and
continue to trade on the Nasdaq Global Select MarketSM
under the symbol LRCX.
Martin Anstice CEO will lead the combined company, and Lam
Research and KLA-Tencor anticipate a combined company leadership
team with strong representation from both companies across all
functions. Steve Newberry, Lam
Research's Chairman, will continue in that role and two board
members from KLA-Tencor will join the combined company board
effective upon closing.
Both companies announced results for the quarters ended
September 27, 2015, in the case of
Lam Research, and September 30, 2015,
in the case of KLA-Tencor, concurrent with the transaction
announcement. The full details of such results can be found in a
separate release from each company.
Advisors
Goldman Sachs is acting as exclusive
financial advisor to Lam Research and Jones
Day is providing legal counsel. Qatalyst Partners is acting
as financial advisor to KLA-Tencor, and Wilson Sonsini Goodrich & Rosati is
providing legal counsel.
Conference Call and Webcast Details
The companies will
hold a joint conference call today at 8:00
a.m. EDT (5:00 a.m. PDT) to
discuss this announcement. The conference call can be joined by
dialing 1-888-438-5453, Conference ID 4899617, within the U.S. and
1-719-325-2494, Conference ID 4899617, for all other locations. To
access the webcast, visit the Investors section of Lam's web site
at http://www.lamresearch.com and click on the Calendar/Webcasts
section to view the details. A webcast replay will be available on
the Lam Research web site approximately three hours after the
conference call concludes.
About Lam Research
Lam Research Corp. (Nasdaq: LRCX)
is a trusted global supplier of innovative wafer fabrication
equipment and services to the semiconductor industry. Lam's broad
portfolio of market-leading deposition, etch, and clean solutions
helps customers achieve success on the wafer by enabling device
features that are 1,000 times smaller than a grain of sand,
resulting in smaller, faster, more powerful, and more
power-efficient chips. Through collaboration, continuous
innovation, and delivering on commitments, Lam is transforming
atomic-scale engineering and enabling its customers to shape the
future of technology. Based in Fremont,
Calif., Lam Research is a Nasdaq-100 Index® and S&P 500®
company whose common stock trades on the Nasdaq Global Select
MarketSM under the symbol LRCX. For more information,
please visit http://www.lamresearch.com. (LRCX-F)
About KLA-Tencor
KLA-Tencor Corporation, a leading
provider of process control and yield management solutions,
partners with customers around the world to develop
state-of-the-art inspection and metrology technologies. These
technologies serve the semiconductor, LED, and other related
nanoelectronics industries. With a portfolio of industry-standard
products and a team of world-class engineers and scientists, the
company has created superior solutions for its customers for nearly
40 years. Headquartered in Milpitas,
Calif., KLA-Tencor has dedicated customer operations and
service centers around the world. Additional information may be
found at www.kla-tencor.com. (KLAC-F)
Forward Looking Statements
All statements included or
incorporated by reference in this press release, other than
statements or characterizations of historical fact, are
forward-looking statements within the meaning of the federal
securities laws, including Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. These forward-looking statements are based on
Lam's and KLA-Tencor's current expectations, estimates and
projections about its respective business and industry,
management's beliefs, and certain assumptions made by Lam and
KLA-Tencor, all of which are subject to change. Forward-looking
statements can often be identified by words such as "anticipates,"
"expects," "intends," "plans," "predicts," "believes," "seeks,"
"estimates," "may," "will," "should," "would," "could,"
"potential," "continue," "ongoing," similar expressions, and
variations or negatives of these words. Examples of such
forward-looking statements include, but are not limited to: (1)
references to the anticipated benefits of the proposed transaction;
(2) the expected industry leadership, future technical capabilities
and served markets of the individual and/or combined companies; (3)
projections of pro forma revenue, cost synergies, revenue
synergies, cash flow, market share and other metrics, whether by
specific market segment, or as a whole, and whether for each
individual company or the combined company; (4) market expansion
opportunities and systems and products that may benefit from sales
growth as a result of changes in market share or existing markets;
(5) technological achievements that may be realized by the combined
company, (6) the allocation of merger consideration in the
transactions; (7) the financing components of the proposed
transaction; (8) potential financing opportunities, together with
sources and uses of cash; (9) potential dividend growth rates; and
(10) the companies' ability to achieve the closing conditions and
the expected date of closing of the transaction.
These forward-looking statements are not guarantees of future
results and are subject to risks, uncertainties and assumptions
that could cause actual results to differ materially and adversely
from those expressed in any forward-looking statement. Important
risk factors that may cause such a difference in connection with
the proposed transaction include, but are not limited to, the
following factors: (1) the risk that the conditions to the closing
of the transaction are not satisfied, including the risk that
required approvals for the transaction from governmental
authorities or the stockholders of KLA-Tencor or Lam are not
obtained; (2) litigation relating to the transaction; (3)
uncertainties as to the timing of the consummation of the
transaction and the ability of each party to consummate the
transaction; (4) risks that the proposed transaction disrupts the
current plans and operations of KLA-Tencor or Lam; (5) the ability
of KLA-Tencor and Lam to retain and hire key personnel; (6)
competitive responses to the proposed transaction and the impact of
competitive products; (7) unexpected costs, charges or expenses
resulting from the transaction; (8) potential adverse reactions or
changes to business relationships resulting from the announcement
or completion of the transaction; (9) the combined companies'
ability to achieve the growth prospects and synergies expected from
the transaction, as well as delays, challenges and expenses
associated with integrating the combined companies' existing
businesses; (10) the terms and availability of the indebtedness
planned to be incurred in connection with the transaction; and (11)
legislative, regulatory and economic developments, including
changing business conditions in the semiconductor industry and
overall economy as well as the financial performance and
expectations of Lam's and KLA-Tencor's existing and prospective
customers. These risks, as well as other risks associated with the
proposed transaction, will be more fully discussed in the joint
proxy statement/prospectus that will be included in the
Registration Statement on Form S-4 that Lam will file with the
Securities and Exchange Commission ("SEC") in connection with the
proposed transaction. Investors and potential investors are urged
not to place undue reliance on forward-looking statements in this
document, which speak only as of this date. Neither Lam nor
KLA-Tencor undertakes any obligation to revise or update publicly
any forward-looking statement to reflect future events or
circumstances. Nothing contained herein constitutes or will be
deemed to constitute a forecast, projection or estimate of the
future financial performance of Lam, KLA-Tencor, or the merged
company, whether following the implementation of the proposed
transaction or otherwise.
In addition, actual results are subject to other risks and
uncertainties that relate more broadly to Lam's overall business,
including those more fully described in Lam's filings with the SEC
including its annual report on Form 10-K for the fiscal year ended
June 28, 2015, and KLA-Tencor's
overall business and financial condition, including those more
fully described in KLA-Tencor's filings with the SEC including its
annual report on Form 10-K for the fiscal year ended June 30, 2015.
Additional Information and Where to Find It
This press
release does not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or
approval nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. The proposed transaction
will be submitted to the stockholders of each of Lam and KLA-Tencor
for their consideration. Lam intends to file with the SEC a
Registration Statement on Form S-4 that will include a joint proxy
statement/prospectus of Lam and KLA-Tencor. Each of Lam and
KLA-Tencor will provide the joint proxy statement/prospectus to
their respective stockholders. Lam and KLA-Tencor also plan to file
other documents with the SEC regarding the proposed transaction.
This document is not a substitute for any prospectus, proxy
statement or any other document that Lam or KLA-Tencor may file
with the SEC in connection with the proposed transaction. Investors
and security holders of Lam and KLA-Tencor are urged to read the
joint proxy statement/prospectus and any other relevant documents
that will be filed with the SEC carefully and in their entirety
when they become available because they will contain important
information about the proposed transaction. You may obtain
copies of all documents filed with the SEC regarding this
transaction, free of charge, at the SEC's website (www.sec.gov). In
addition, investors and stockholders will be able to obtain free
copies of the joint proxy statement/prospectus and other documents
filed with the SEC by Lam on Lam's Investor Relations website
(investor.lamresearch.com) or by writing to Lam Research
Corporation, Investor Relations, 4650 Cushing Parkway, Fremont, CA 94538-6401 (for documents filed
with the SEC by Lam), or by KLA-Tencor on KLA-Tencor's Investor
Relations website (ir.kla-tencor.com) or by writing to KLA-Tencor
Corporation, Investor Relations, One Technology Drive, Milpitas, California 95035 (for documents
filed with the SEC by KLA-Tencor).
Participants in the Solicitation
Lam, KLA-Tencor,
their respective directors, and certain of their respective
executive officers, other members of management and employees, may,
under SEC rules, be deemed to be participants in the solicitation
of proxies from Lam and KLA-Tencor stockholders in connection with
the proposed transaction. Information regarding the persons who,
under SEC rules, are or may be deemed to be participants in the
solicitation of Lam and KLA-Tencor stockholders in connection with
the proposed transaction will be set forth in the joint proxy
statement/prospectus when it is filed with the SEC. You can find
more detailed information about Lam's executive officers and
directors in its definitive proxy statement filed with the SEC on
September 21, 2015. You can find more
detailed information about KLA-Tencor's executive officers and
directors in its definitive proxy statement filed with the SEC on
September 24, 2015. Additional
information about Lam's executive officers and directors and
KLA-Tencor's executive officers and directors will be provided in
the above-referenced Registration Statement on Form S-4 when it
becomes available.
1Revenue includes, for both companies, calendar year
2015 actual results to date, plus the midpoint of December quarter
revenue guidance, to reflect an estimated pro forma calendar year
2015 result.
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SOURCE KLA-Tencor Corporation