Dec. 18, 2002 — Veeco Instruments Inc. and FEI Co. said they won’t merge as planned by year’s end, citing delays in obtaining regulatory and shareholder approvals.

Debra Wasser, Veeco’s vice president of investor relations and corporate communications, said the merger has yet to be cleared by the U.S. Department of Justice, the Securities and Exchange Commission and approved by the companies’ shareholders. The primary cause of the delay has been a second request for information from the Justice Department, though she declined to offer details.

“By last week, it became a technical impossibility to get this done by the end of the year,” she said. “We didn’t expect this to happen, but those things can never be taken for granted.”

The firms said they are discussing changes to the deal they announced in July, which called for them to merge by Dec. 31 and for FEI to become a wholly owned subsidiary of Veeco. The companies could not say when or whether those regulatory approvals will be met or if they ultimately will agree to merge.

Dec. 31 marks the end of the penalty phase of the merger agreement, during which a company that wanted out of the deal would have to pay the other a $30 million breakup fee. Among the changes under consideration by the firms is whether to extend that penalty phase.

She said both companies have started working on integration planning. “Strategically, our product lines are very complementary and there are all these great reasons to do this merger.”

Based on combined 2001 sales of $825 million, the two companies together would constitute the sixth largest U.S. semiconductor equipment company and the third largest U.S. supplier of metrology equipment. Both firms make microscopy tools and other technology for the small tech industry.