Applied Materials stockholders OK merger with Tokyo Electron

Jun 24, 2014
Austin American Statesman

Stockholders on Monday approved Applied Materials’ merger with another tech company with an Austin presence, Tokyo Electron Limited, company officials said


The merger of the two pioneering technology companies would create the largest player in the consolidating chip equipment industry


In Austin, the two companies together employ nearly 3,000 people. Applied Materials operates its largest global manufacturing center in Northeast Austin off U.S. 290. President Barack Obama spoke at the Applied Materials factory here when he visited Austin last year. Tokyo Electron employs about 340 people at its U.S. headquarters complex in Southeast Austin. That facility concentrates on marketing and customer technical support, as well as shared services for all of the company’s North American operations


About 99 percent of the shares voting at Applied Materials’ May 9 special stockholders meeting voted in favor of the merger, representing about 78 percent of shares of the company’s common stock outstanding, company officials said Monday


“Today’s strong show of support underscores the value our merger brings to stockholders,” said Gary Dickerson, CEO of Applied Materials. “The combination will enable us to accelerate development of breakthrough products to solve our customers’ high-value problems better, faster and at lower cost.”


The merger remains subject to conditions in the agreement, including review by regulators in various countries. Applied Materials said it expects the transaction to close in the second half of 2014


Analysts said the deal makes sense because the list of major buyers of semiconductor equipment is shrinking. Just three companies, Intel Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., account for the lion’s share of sales of cutting-edge semiconductor manufacturing equipment. Industry insiders say the three big customers are receptive to the merger because they believe it will help them push forward with advanced chipmaking know-how, which is crucial to the progress of their industry


The merger will create a combined company worth about $29 billion that will be the leader in most of the crucial steps involved in semiconductor manufacturing


The two companies are describing the potential merger as a “marriage of equals” between companies that have complementary product lines that cover most of the process steps required for chip manufacturing


The combined company will have two headquarters, Santa Clara, Calif., and Tokyo


Applied Materials shareholders will wind up owning 68 percent of the combined company, while Tokyo Electron shareholders own the rest


The combined company, as yet unnamed, is expected to have annual sales of $12.6 billion and a global workforce of about 27,000



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