Applied Materials Inc. (AMAT) signed a definitive agreement to
acquire Varian Semiconductor Equipment Associates Inc. (VSEA) for
$4.9 billion in cash, a move that will expand the semiconductor
equipment maker's wafer-fabrication offerings.
The bid, worth $63 a share, represents a 55% premium to
Tuesday's closing price. The stock, up 9.7% so far this year, has
never traded above the offer price.
Varian shares surged 50% to $61 in light premarket trading,
while Applied Materials was inactive and closed Tuesday at
$15.24.
Applied Materials--a semiconductor-equipment maker that makes
tools used to make chips, television screens and some solar
panels--has seen results improve lately, helped by a sharp increase
in sales and better margins.
The deal comes amid a wave of consolidation in the tech
industry, particularly within the chip segment. Last month, Texas
Instruments Inc. (TXN), in a move to expand its analog chip
business, agreed to buy National Semiconductor Corp. (NSM) for
about $6.5 billion in cash, a lofty 78% premium to the company's
valuation.
Applied Materials said Varian's ion implant products complement
its silicon systems group's suite of products in the areas of
transistor, interconnect, wafer level packaging and patterning.
The deal is expected to add to its earnings on an adjusted basis
in the first year. Both boards have already approved the pact.
"In addition to our combined strengths in the semiconductor
space, Applied's proven capability to extend its technology to
adjacent markets like solar and display can help unlock the
tremendous potential of ion implantation in these markets," Varian
Chief Executive Gary Dickerson said.
Applied expects to fund the transaction with a combination of
existing cash balances and debt. It secured a commitment for a $2
billion, one-year senior bridge loan facility and plans to arrange
for long-term debt financing.
Applied Materials reported in February that its fiscal
first-quarter earnings soared, topping its own estimates, as
revenue increased sharply and margins improved.
Meanwhile, late last month, Varian Semiconductor reported a
quarterly profit that more than doubled as revenue surged 62%.
-By Lauren Pollock, Dow Jones Newswires; 212-416-2356; lauren.pollock@dowjones.com