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Applied Materials to buy Tokyo Electron for $29 billion

Staff writer |
Applied Materials will buy rival Tokyo Electron Ltd in an all-share deal, creating a company with a combined stock market value of $29 billion, the two companies said.

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The surprise move is expected to strengthen their position in a maturing industry where growth opportunities have become harder to find.

U.S.-listed Applied Materials is the world's largest maker of semiconductor equipment by sales, followed by ASML Holding NV and Tokyo Electron, according to Gartner. ASML is the dominant maker of lithography tools that etch circuitry onto chips, a segment Applied Materials and Tokyo Electron do not compete in.

For every existing share, Tokyo Electron shareholders will receive 3.25 shares of the as-yet unnamed new company, and Applied Materials shareholders will receive 1 share, leaving the latter with about 68 percent ownership. The companies expect the deal to close in the middle to second half of next year.

Applied Materials CEO Gary Dickerson will be chief executive of the combined company and Tokyo Electron's Higashi will become chairman. The companies said in a joint statement they would maintain dual listings on Nasdaq and the Tokyo Stock Exchange.

They expect to achieve $250 million savings in synergies by the end of their first full fiscal year and will buy back $3 billion in the company's own shares within 12 months of the combination.

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