Semiconductor equipment maker Lam Research has agreed to acquire rival Novellus Systems in an all-stock deal worth $3.3 billion, the companies announced today.
The combined venture is expected to benefit from the individual companies' complementary product capabilities, with Novellus' thin-film application technology aligning with Lam's business of etching the film to create features that define a chip's final use and function.
Under the agreement's terms Novellus stockholders will get 1.125 shares of Lam common stock for each Novellus share, a premium of about 28 percent higher than Novellus' $34.70 closing price Wednesday. When the deal closes, Lam stockholders will own approximately 59 percent of the combined company and Novellus stockholders will own approximately 41 percent.
"This strategic combination positions Lam Research to lead the development of next-generation semiconductor manufacturing technology and productivity solutions at a time when growing semiconductor demand and increased device complexity are creating significant business opportunities," Lam CEO Steve Newberry said in a statement.
The acquisition comes at a rough time for the chip equipment industry, as economic fears in Europe and U.S. has moved chipmakers to cancel or cut equipment orders. Global semiconductor equipment spending is expected to total $51.7 billion in 2012, a 19.5 percent decline from projected 2011 spending of $64.2 billion, market researcher Gartner said today.
Expected to be finalized in the second quarter of 2012, the deal could lead to $100 million in cost savings on an annualized basis by late 2013. Fremont, Calif.-based Lam also announced a $1.6 billion stock buyback program.