Veeco to buy FEI in $1 billion stock deal

WOODBURY, NY, and HILLSBORO, OR, – Veeco Instruments Inc. and FEI Co. have penned a definitive merger agreement to combine the companies into one provider of 3-D metrology and process equipment.

FEI will become a wholly owned subsidiary of Veeco, and Veeco will be renamed Veeco FEI Inc. The company will continue to trade on the Nasdaq market under the ticker symbol VECO.

The agreement was unanimously approved by the boards of directors of both companies, and FEI stockholders will receive 1.355 shares of Veeco common stock for each share of FEI they own.

Based upon FEI’s approximately 32 million diluted shares outstanding, the FEI stockholders will receive approximately 44 million Veeco FEI shares with a current value of approximately $1 billion.

The merger, which will be accounted for using the purchase method, is intended to be tax-free to FEI stockholders, and is expected to close during 4Q02.

Veeco and FEI managements currently anticipate operating
synergies of approximately $8-10 million on an annualized basis resulting from integration of the companies’ sales and support networks, supplier management, and manufacturing and administrative efficiencies.

Vahe A. Sarkissian, FEI’s Chairman, President and Chief Executive Officer, will become chairman of the board and chief strategy officer of Veeco FEI; Edward H. Braun, Veeco’s chairman, president and CEO, will remain CEO and president.

Veeco FEI’s board of directors will have 13 members, seven of whom are current members of Veeco’s board (including Braun), five of whom are current members of FEI’s Board (including Sarkissian), and one of whom will be designated by Philips Business Electronics International B.V., a significant stockholder of FEI.

John F. Rein Jr., Veeco’s exec. VP and CFO, will remain CFO of the combined company.

Veeco FEI’s corporate headquarters will be located in Woodbury, NY, the
current Veeco headquarters, and FEI’s current headquarters in Hillsboro, Oregon will remain a significant facility for Veeco FEI as a center of research and development and manufacturing. Veeco FEI will have approximately 2,900 employees at its key facilities in North America, Europe, Japan and the Asia-Pacific region.

Braun commented, “Based on combined 2001 sales of $825 million, together we become the sixth largest U.S. semiconductor equipment company and the third largest US supplier of metrology equipment.”


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