US based semiconductor equipment maker Applied Materials has signed an agreement to acquire its Japanese rival Tokyo Electron for about $10bn.
Claimed to be the second-largest foreign acquisition of a Japanese firm, the latest deal would create a merged group with a market worth about $29bn which will be 68% owned by Applied Materials shareholders.
Applied Materials president and CEO Gary Dickerson said that the deal will create a global innovator in precision materials engineering and patterning that provides the new firm with significant opportunities to solve customers’ high-value problems better, faster and at lower cost.
"We believe the combination will accelerate our momentum for profitable growth, increase the value we deliver to shareholders and create great opportunities for our employees," Dickerson said.
Upon the anticipated completion of the deal in second half of 2014, the new merged group plans to begin a $3bn stock repurchase programme.
Tokyo Electron chairman, president and CEO Tetsuro Higashi said the new merged firm would expand the value delivered to customers and be able to achieve new levels of financial performance.
"Today, we are launching a new company and taking a bold step forward for our industry," Higashi said.
The combined organisation is targeted at accelerating the current strategic visions of both firms, while boosting the new firm’s opportunity to enable major, future technology variations and advance consumers’ roadmaps in both semiconductor and display.
Higashi and Dickerson said in a joint statement that the new firm is being built in the spirit of a merger of equals.
"For five decades, we have each made significant contributions to the semiconductor industry and we have deep respect for the capabilities that the other brings to this combination," both said.
"We share many common values and are confident we will execute together to achieve our strategic and financial goals."
The latest deal would offer the US firm with opportunity over close rival, Dutch chip equipment maker ASML, increasing its market share in semiconductor manufacturing equipment to about 25%, according to Gartner.
