19 March 2018
KLA-Tencor to acquire SPTS’ parent firm Orbotech
© Semiconductor Today Magazine / Juno PublishiPicture: Disco’s DAL7440 KABRA laser saw.
Process control and yield management solutions provider KLA-Tencor Corp of Milpitas, CA, USA has agreed to acquire Orbotech Ltd of Yavne, Israel for $38.86 in cash and 0.25 of a share of KLA-Tencor common stock in exchange for each ordinary share of Orbotech - a total of $69.02 per share. The deal gives Orbotech an equity value of $3.4bn and an enterprise value of $3.2bn.
KLA-Tencor has also announced the authorization of a $2bn share repurchase program, to be completed within 12-18 months following the close of the transaction.
With this acquisition, KLA-Tencor will diversify its revenue base and add $2.5bn of addressable market opportunity in the printed-circuit board (PCB), flat-panel display (FPD), packaging and semiconductor manufacturing areas. Its defect inspection and metrology products include systems for LED manufacturing. However, as well as providing yield-enhancing and process-enabling solutions for electronics production, Orbotech owns SPTS Technologies Ltd of Newport, Wales, UK (which manufactures etch, PVD and CVD wafer processing solutions for the MEMS, advanced packaging, LED, high-speed RF, and power management device markets). The broader portfolio of products, services and solutions, as well as increased exposure to technology megatrends, should support KLA-Tencor’s long-term revenue and earnings growth targets, it is reckoned.
“This acquisition is consistent with our strategy to pursue sustained, profitable growth by expanding into adjacent markets,” says KLA-Tencor’s president & CEO Rick Wallace. “This combination will open new market opportunities for KLA-Tencor, and expands our portfolio serving the semiconductor industry,” he adds. “Our companies fit together exceptionally well in terms of people, processes and technology. In addition, KLA-Tencor has had a strong presence in Israel over the years, and this combination further expands our operations in this important global technology region,” Wallace notes.
“Together with KLA-Tencor, we will significantly increase growth potential, accelerate our product development roadmap, and enhance customer offerings,” comments Orbotech’s CEO Asher Levy. “Orbotech will continue to operate under the Orbotech brand as a standalone business of KLA-Tencor based in Yavne, Israel.”
Total cost synergies are expected to be about $50m on an annualized basis within 12-24 months following the closing of the transaction, which is expected to be immediately accretive to KLA-Tencor’s revenue growth model, non-GAAP earnings and free cash flow per share.
The deal has been approved by the board of directors of each company and is expected to close by fourth-quarter 2018, subject to approval by Orbotech’s shareholders, required regulatory approvals and the satisfaction of the other customary closing conditions. No approval by KLA-Tencor stockholders is required. KLA-Tencor intends to fund the cash portion of the purchase price with cash from the combined company’s balance sheet. In addition, it intends to raise about $1bn in new long-term debt financing to complete the share repurchase.