Brooks acquires PRI Automation

12/01/2001

Meg Villeneuve

Aims to capture bulk of 300 mm business

CHELMSFORD, MA—In a deal valued at $380 million, Brooks Automation has acquired PRI Automation (Billerica, MA). According to analysts, the deal between the companies makes sound business sense due to respective market strengths and little overlap in minienvironment and automation product lines.

"[The two companies] combined together, will create the largest supplier of semiconductor automation systems, software and services in the industry," says SG Cowen analyst Tia Min Pang. "Not only will this merger catapult Brooks as the number-one supplier in all its served markets, it would also enhance its per-fab opportunity to approximately $150 million."

The companies say that this new entity, Brooks-PRI Automation, aims to capture the majority of 300 mm automation, software and services business.

"I am tremendously excited about the creation of Brooks-PRI Automation," says Mitch Tyson, PRI's CEO. "The semiconductor fab of the future will need to be highly flexible, efficient and intelligent. It must be fully automated to optimize the flow of material and information and no company will be better able to capture this market opportunity, help drive the transition to 300 mm, and build shareholder value."

PRI shareholders will receive 0.52 shares of Brooks stock for each PRI share held, which makes the deal valued at $440 million, based on current stock prices. The deal is expected to close in the beginning of 2002. Once complete, Brooks will own 61 percent of the new company and PRI shareholders will get the remaining 39 percent.

"Clearly, this merger has its long-term advantages in terms of growth in product portfolio, larger served available market and increased critical mass but, we believe, there are some short-term concerns that need to be addressed," Cowen's Pang adds.

Those issues include PRI's gross margins of 17 percent, well below Brooks' gross margin of 46 percent, according to SG Cowen. A spokesperson for Brooks-PRI declined to comment on gross margins, citing that the merger was not complete and any discussions on customers, products and profits would have to wait until it is complete.

The merger directly effects automation manufacturer Asyst Technologies,because products from both PRI and Brooks compete with its front loaders and automated material handling systems (AMHS).

Asyst's President and CEO, Mihir Parikh, says that he sees the merger as a window of opportunity for Asyst to claim more market share. "We plan to make a concerted effort with our products and customer relations and expect to take more market share," Parikh says.