July 10, 2012 — ASML Holding NV established a program to enable its largest customers to make minority equity investments in ASML, with Intel taking a 15% stake in the semiconductor manufacturing tool maker. The program includes commitments to fund ASML’s R&D spending, accelerating development of extreme ultraviolet (EUV) lithography technology and 450mm silicon wafer technology for 2015-2020 timeframe.
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As part of this program, ASML may issue up to an aggregate 25% minority equity stake to customers. The entire cash proceeds from the share issuance will be returned to ASML shareholders (not including participating customers). Alongside these equity investments, participating customers would fund a significant portion of ASML’s R&D activities for the next five years. If the maximum aggregate 25% available shares are fully subscribed, customers would have acquired the shares for an aggregate value of EUR 4.19 billion², and would have committed R&D funding of EUR 1.38 billion, to be received over the period 2013 to 2017.
Intel is the first participant in the customer co-investment program, and has committed to acquire up to a 15% equity ownership interest at a subscription price of EUR 39.91 per share¹, and to also provide EUR 829 million to ASML in R&D funding, which will be dedicated to the development of 450mm and EUV technology. Additionally, Intel has contractually committed to advance purchase orders for 450mm and EUV development and production tools from ASML to support technology and infrastructure development under agreed-upon conditions of sales.
Other customers are currently evaluating joining the program.
The results of the technology investments will be available to every semiconductor manufacturer with no restrictions.
"Circuit design scaling and enhanced productivity in wafer manufacturing technologies, especially lithography, are direct enablers of Moore’s Law," said Brian Krzanich, Intel SVP and COO. “By using EUV technology, the industry will be able to scale geometries further. By moving from today’s standard 300 mm wafers to new larger 450 mm wafers, the industry can effectively double the capacity of its factories for only a fraction of the cost.”
Details: Under the terms of the agreement, ASML will first issue new shares equivalent to 9.99% of ASML’s issued share capital (the First Issuance), to Intel in exchange for EUR 1.7 billion in cash. In addition, Intel has committed EUR 553 million of R&D funding to accelerate ASML’s 450mm silicon wafer technology development. ASML can issue the shares under the First Issuance as per the decisions made at ASML’s 2012 Annual General Meeting of shareholders. Subject to shareholders’ approval at an Extraordinary General Meeting of shareholders (EGM) to be scheduled for September 2012, the entire cash proceeds from the First Issuance will be returned to ASML shareholders (not including participating customers) through a synthetic buy-back as described below.
ASML intends to issue the remaining shares in the program (the Second Issuance), up to a total of 15% of ASML’s issued share capital, the proceeds of which will also be returned to shareholders (not including participating customers) through a synthetic buy-back. The Second Issuance, as well as the synthetic buy-back, are subject to the approval of ASML’s shareholders at the EGM. Of this 15%, Intel has agreed to purchase 5% of ASML’s issued share capital and will commit EUR 277 million R&D funding for the EUV project upon approval by ASML shareholders. Other customers are currently considering the opportunity to invest in the remaining available 10% of ASML’s issued share capital under the Second Issuance, on the same basic terms as Intel and at a price not lower than the Intel price. If shareholder approval is not obtained at the EGM, there will be neither a synthetic buyback nor a Second Issuance, in which case the number of our issued shares would increase by 9.99% (the First Issuance), with Intel remaining obligated to fund the 450mm technology development project.
The customer co-investment program is intended to have no effect on the total current number of ASML shares outstanding. Following the receipt from participating customers of the aggregate subscription proceeds from the First Issuance and the Second Issuance, ASML will effect a synthetic buy-back, consisting of a repayment to shareholders of the aggregate subscription proceeds and a reverse stock split. The shares purchased by participating customers will be excluded from the synthetic buy-back. ASML has used a similar synthetic buy-back process in 2007 as an efficient way of executing large buy-backs for its own share repurchase program: 55,093,409 shares were repurchased in this manner for a total amount of EUR 1,012 million.
The shares issued through the program to ASML customers will be held by a foundation (Stichting Administratiekantoor) until a relevant termination event occurs; in order to ensure ASML’s strategic and operational independence, these shares will be non-voting, except in limited extraordinary circumstances, and will be subject to a lock-up. As part of these arrangements, any single customer would not increase its holdings in ASML above 19.9% for a period of six years.
The terms of the proposed synthetic buy-back and the Second Issuance will be subject to approval by ASML shareholders at the EGM and statutory provisions regarding repayment of capital. In addition, the participation of Intel in the customer co-investment program will be subject to customary regulatory approvals, including the termination of waiting periods applicable under the U.S. Hart-Scott-Rodino (HSR) Act.
For regulatory reasons, in connection with the transactions described in this press release, ASML has suspended its regular share buy-back programs until further notice. ASML intends to resume share buy-backs when permitted under applicable regulations. A video interview with CFO Peter Wennink about the co-investment program is available on www.asml.com.
ASML is a leading provider of lithography systems for the semiconductor industry. More information: www.asml.com.