Applied Materials Inc, the world’s largest supplier of semiconductor fabrication equipment, has announced an agreement to acquire the struggling MES software company, Consilium Inc, for approximately $42m in stock. The actual value of the deal will be defined by the average price of Applied Material stock in the run up to a Consilium shareholder meeting where the offer will be voted on. Based on pre-deal closing prices, however, Applied is offering a premium of around 250% on Consilium’s depressed share price. Prior to the offer, Consilium’s shares had been trading at or near their all time low. The company is based in Mountain View, not far from Applied Material own base in Santa Clara, and it sells its manufacturing execution systems (MES) software to many of the firms who buy Applied’s chip making equipment. The software is used to optimize manufacturing processes, particularly in the electronics and semiconductor fabrication markets. A spokesperson for Applied said the deal would offer it customers, A wide range of synergies … to improve overall equipment effectiveness and total fabrication productivity. Applied also said the deal fitted with its objectives to offer a more complete business package. However, Consilium has endured several years of losses and more recently, sales at the firm have also started to decline, dragging the share price down. At the end of July, Consilium’s cash reserves had dwindled to just $6.7m, less than the company’s reported losses in the preceding year, and the company was clearly in need of financial support. The deal is expected to close within the next three to four months and will be accounted for by Applied Materials as a pooling of interests.
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