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Applied acquires Varian, makes ion implanter comeback

Posted: 09 May 2011 ?? ?Print Version ?Bookmark and Share

Keywords:Applied-Varian agreement? ion implanter? wafer fabrication equipment? ion implantation equipment?

Applied Materials Inc. is set to make a comeback to the ion implanter business.

Under the definitive agreement it recently inked with Varian Semiconductor Equipment Associates Inc., Applied will purchase Varian for $63 per share in cash, placing the transaction value at around $4.9 billion.

Applied's acquisition of the technology leader in ion implantation will extend its efforts in wafer fabrication equipment (WFE). Varian is the leading supplier of ion implantation equipment used by chipmakers around the world. Varian also sells an implanter line for solar.

Several years ago, Applied dropped out of the implanter business, it was noted. In 2007, the company announced its intention to cease future development of ion implanter products and closed its operations in the arenaa move that impacted 270 employees. The company closed its Applied Implant Technologies group based in Horsham, England.

At the time, Applied lagged behind in ion implanters. Now, the deal with Varian will give Applied a ''dominant position in ion implant,'' said C.J. Muse, an analyst with Barclays Capital Inc., in a report. Varian has about 75 percent market share in the arena, he said. In 2010, Nissin was projected to have 9 percent share in implanters, followed by Sumitomo (8 percent) and Axcelis (6 percent), according to the firm.

Following the close of the transaction, Varian will operate as a business unit of Applied's Silicon Systems Group and continue to be based in Gloucester, Massachusetts. The transaction is expected to be accretive to Applied's earnings on a non-GAAP basis in the first year. The price represents a 55 percent premium to its closing price on May 3, or a 38 percent premium to Varian's 30 day average closing price. The closing of the acquisition is subject to customary conditions, including approval by Varian's shareholders and review by U.S. and international regulators.

"Varian is a great fit for our strategy to profitably grow share in our core semiconductor business with best-in-class technology and talent," said Mike Splinter, chairman and CEO of Applied, in a statement.

Not long ago, Applied's fab equipment business fell off a cliff; it paid more attention to the solar business. But seeking to regain momentum in the fab equipment market, Applied has recently thrown down the gauntlet in the arena.

In 2009, Applied acquired the outstanding shares of fab tool vendor Semitool Inc. for $11 per share in an all-cash tender offer. Since 2009, Applied has rolled out a dozen or so products for semiconductor fabs.

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