Teradyne tests flash mettle with Nextest M&A

December 12, 2007 – Teradyne and Nextest have agreed to a $325M acquisition that gives system-on-chip test provider Teradyne inroads into the flash memory market.

Terms of the deal are $20/share in cash, what was a 66% premium over NEXT’s closing share price on Dec. 10 — but NEXT shares have soared since the deal was announced, almost entirely wiping out that premium. Teradyne says the deal will be “slightly dilutive” to 2008 GAAP EPS. NEXT will be run as a business unit within Teradyne’s semiconductor test division.

The deal gives Teradyne an immediate presence in the flash memory test sector, which the firms peg at $700M in 2006, and represented nearly all (83%) of Nextest’s $95.8M in sales. “Nextest brings us a solid flash memory test product line” that is complimentary to Teradyne’s SoC offerings, “plus a very capable development and technical support organization,” said Michael Bradley, president and CEO of Teradyne, in a statement. “This is one of the few business combinations in the test market where customers get products that are so complementary.”

For Nextest, the agreement provides “the market presence and superior reputation of the premier ATE provider,” according to CEO Robin Adler. Teradyne’s technology capabilities and customer relationships also will help lower test costs and grow the business, he added.

Nextest captured the No.2 spot among test equipment vendors in VLSI Research’s 2007 customer surveys, scoring its top marks in customer service oriented areas “support after sales” and “commitment.” The firm was the No.1-ranked ATE supplier in VLSI’s 2006 survey.


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