TSM Taiwan Semiconductor Manufacturing Co Ltd

ASML Holding NV has agreed to buy Taiwan-based Hermes Microvision Inc. for about US$3.09 billion, the latest in a string of deals in the global semiconductor industry.

ASML will pay 1,410 New Taiwan Dollars per share for Hermes Microvision, representing a 31% premium on the company's average share price over the past 30 days. The acquisition will be financed by debt, stock and cash and is expected to close before the end of the year.

ASML, based in Veldhoven, the Netherlands, is the world's largest manufacturer by sales of lithography systems, which are used to print circuit patterns on silicon wafers. Hermes Microvision specializes in making pattern verification systems for semiconductor devices.

ASML had sales of €6.3 billion ($7.1 billion) in 2015, while Hermes Microvision recorded €182 million in revenue.

The semiconductor industry has experienced a wave of consolidation in the past two years as chip-makers and their suppliers look to build scale in response to slowing growth and rising costs. Last year alone, chip companies announced more than $100 billion in mergers and acquisitions, according to Dealogic.

ASML said the industry is seeking to develop ever-smaller and more complex chips and that its acquisition of Hermes Microvision could make it easier to address these challenges. The tie-up will enable the companies to accelerate their product integration, helping the industry to boost production of the most advanced microchips, it said.

"Our two companies have worked together for almost two years to see how we could best combine our capabilities, and found that we could significantly improve this constructive cooperation and better serve our customer by teaming up as one company," said ASML Chief Executive Peter Wennink.

ASML plays an important role in the global semiconductor market as the leading supplier of the equipment needed to produce chips for everything from smartphones to computers. Its biggest clients are Intel Corp., Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., who together invested billions of dollars in the company in 2012 to speed up development of so-called extreme ultraviolet lithography machines, or EUV.

The EUV technology, which had a breakthrough last year, can produce smaller and more powerful chips but its development has been costly and complex. ASML said the acquisition of Hermes Microvision could also support its EUV systems, which are scheduled to begin with volume production in 2018.

Bryan Garnier analysts welcomed the deal but said the acquisition "doesn't change our view that the timing of adoption of EUV is under pressure given the current tough environment in the semiconductor market."

Write to Maarten van Tartwijk at maarten.vantartwijk@wsj.com and Josh Beckerman at josh.beckerman@wsj.com

(END) Dow Jones Newswires

June 16, 2016 10:25 ET (14:25 GMT)

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