Applied Materials And Tokyo Electron To Merge In All-stock Deal - Quick Facts

(RTTNews) - Applied Materials Inc. (AMAT) and Tokyo Electron Limited announced a definitive agreement to create a global innovator in semiconductor and display manufacturing technology through an all-stock combination which values the new combined company at about $29 billion or 2.8 trillion yen.

As per the terms of the agreement, Tokyo Electron shareholders will receive 3.25 shares of the new company for every Tokyo Electron share held. Applied Materials shareholders will receive 1 share of the new company for every Applied Materials share held. After the close, Applied Materials shareholders will own approximately 68% of the new company and Tokyo Electron shareholders approximately 32%.

The Boards of Directors of both companies have unanimously approved the merger agreement.

The closing of the transaction is subject to customary conditions, including approval by Applied Materials' and Tokyo Electron's shareholders and review by regulators. The companies expect the transaction to close in mid to second half of 2014.

The companies expect to achieve $250 million in annualized run-rate operating synergies by the end of the first full fiscal year and $500 million in run-rate operating synergies realized in the third full fiscal year.

In addition, the new company expects to realize meaningful savings as a result of the new corporate structure. The new company intends to commence a $3.0 billion stock repurchase program targeted to be executed within 12 months following the close of the transaction. On a non-GAAP basis, taking into account the buyback, the transaction is expected to be earnings per share accretive at the end of the first full fiscal year after transaction close.

Applied Materials noted that the company will have a new name, dual headquarters in Tokyo and Santa Clara, a dual listing on the Tokyo Stock Exchange and the NASDAQ, and will be incorporated in The Netherlands.

Applied Materials stated that Tetsuro Higashi, Chairman, President and CEO of Tokyo Electron, will serve as Chairman of the new company. Gary Dickerson, President and CEO of Applied Materials, will serve as Chief Executive Officer of the new company.

The board will be made up of eleven directors with five directors appointed by each company and one additional director to be mutually agreed upon. Seven of the eleven directors will be independent. Bob Halliday of Applied Materials will serve as Chief Financial Officer.