Novellus to acquire SpeedFam-IPEC in $220 million deal

Aug. 12, 2002 – San Jose, CA & Chandler, AZ – Novellus Systems Inc. and SpeedFam-IPEC Inc. have signed a definitive agreement in which Novellus will acquire all outstanding shares of SpeedFam-IPEC in a stock-for-stock merger and will assume all of SpeedFam-IPEC’s 6.25% convertible subordinated notes due 2004, totaling $115 million.

Together with the purchase of stock and the assumption of net debt, the transaction is valued at approximately $220 million. The deal is expected to close in 4Q02

The acquisition will enter Novellus into the growing market for CMP systems, a critical enabling technology as the industry evolves toward copper damascene manufacturing processes.

SpeedFam-IPEC will become a new product group for Novellus, providing another key building block for addressing the new challenges in the manufacture of advanced devices.

“We view CMP as a key manufacturing technology which will have a significant impact on the yield and performance of the interconnect structure. We believe that the opportunity to interactively optimize the planarization, deposition, and surface preparation for overall performance will give Novellus a major advantage in extending copper/low-k processes to advanced devices,” said Richard S. Hill, chairman and CEO of Novellus.

SpeedFam-IPEC’s next-generation orbital, hard-platen Momentum and
Momentum300 CMP tools offer CMP technology for the most advanced copper interconnects. Momentum is well positioned based on its demonstrated capability in advanced copper/low-k CMP, its flexible and wide
process window, and its proven cost-of-ownership benefits, the companies stated.

As a member of the Damascus Alliance, SpeedFam-IPEC has been working closely with Novellus on technical issues related to copper damascene integration.

The transaction has been approved by the board of directors of both
companies and is expected to formally close in the fourth calendar quarter of 2002 following SpeedFam-IPEC shareholder approval. Novellus shareholder approval is not required. The transaction is expected to be accretive to Novellus’ earnings on a per-share basis by the third calendar quarter of 2003. The merger will be accounted for as a purchase transaction and is intended to qualify as a tax-free reorganization under IRS regulations.


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