“Disappointed,” determined Sumitomo ups Axcelis offer

Mar. 10, 2008 – After an initial rebuff, Sumitomo Heavy Industries has sweetened its proposed takeover offer for Japanese JV partner Axcelis Technologies to $6/share, worth about $630M (vs. the original $5.20/share and $544M), but says the increase is its final offer.

The $6/share asking price is a 48.5% premium to ACLS’ stock price on Feb. 8, before it made the original offer in an unusually public manner. ACLS stock has risen significantly since then, now at $5.59 in midday trading, so the sweetened deal is a 7% premium over current value.

Sumitomo says the sweetened offer comes after “a very constructive dialogue” with ACLS shareholders representing “a substantial majority” of outstanding shares. “We firmly believe this is a full and fair price,” the company writes in another public letter to ACLS board members [PDF], and thus “we do not intend to increase our price again.”

Reiterating its motivation for acquiring its Japanese JV partner, Sumitomo writes that the proposed combination “would allow us collectively to return to a leadership position in the ion implant market through our combined technological strength and collective ability to increase investment.” It also would have access to financial resources from private investment firm TPG.

“We have listened to your shareholders and responded,” the Japanese company writes. “We encourage you to do the same.”


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