AMAT-ASMI redux: No thanks, but we’re listening

June 16, 2008 – In a scenario reminiscent of the recent Axcelis/Sumitomo public M&A tussle, ASMI board members say they aren’t interested in selling their ALD and/or PECVD businesses to Applied Materials “as such” though the firm “is willing to explore and discuss […] any alternative arrangements” that could be beneficial to the company and its shareholders.

Earlier this spring Axcelis found itself fending off a surprise unsolicited offer from its Japanese JV partner Sumitomo Heavy Industries. The dance played out thusly: Axcelis responded with a stern rebuff; Sumitomo sweetened its offer, which was rejected again but with a suggestion that a better deal could be struck; and now the two are reportedly quietly back at the negotiation table.

Similarly, the AMAT/ASMI M&A dance seems to be following the same route, at least initially. Last week AMAT published a verbal offer of $400M-$500M for ASMI’s ALD/PECVD businesses. Now ASMI has responded saying these areas are “integral” to the frontend half of its business, for which it recently laid out a revamped turnaround strategy projecting “significant growth in revenues and operating margins by 2009.”

AMAT has summarily responded to the rejection, reiterating its original terms ($400M-$500M) and its position that its offer is “well in excess of the negative value which has been attributed to ASMI’s entire frontend business for significant periods during the past three years,” and would put a big chunk of cash into ASMI’s coffers. Further, AMAT claims it’s the best strategic fit for the ALD/PECVD businesses, and would provide “an excellent environment” for customers, employees, and other stakeholders. Regarding ASMI’s willingness to discuss other terms, AMAT said it “has a strong interest” in meeting this week to go over other possible transactions and start due diligence, with hopes of a final transaction “in a matter of weeks.”


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