Antitrust Issues Derail Another Merger

Applied Materials and Tokyo Electron decide to go their separate ways after concessions fail to appease Department of Justice.
Katie Kuehner-HebertApril 27, 2015

Applied Materials said Monday that it had terminated its pending deal with Tokyo Electron due to regulators’ unresolved antitrust concerns.

After the United States Department of Justice told the parties that the “coordinated remedy proposal” they submitted would not be sufficient to replace the competition lost from the merger, the two companies determined that there was “no realistic prospect for the completion of the merger.”

“We viewed the merger as an opportunity to accelerate our strategy and worked hard to make it happen,” Applied Materials Gary Dickerson president and chief executive said in a press release announcing the deal termination.

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“While we are disappointed that we are not able to pursue this path, our existing growth strategy is compelling. We are delivering results and gaining share in the semiconductor and display equipment markets, while making meaningful advances in areas that represent the biggest and best growth opportunities for us.”

Both companies announced share buybacks to appease shareholders — Applied Materials said it would buy up to $3 billion worth of shares over three years and Tokyo Electron said it would buy as much as 120 billion yen ($1 billion) worth of shares, or 8.59% of its outstanding stock.

A Reuters story Monday said that the deal between two of the top makers of the equipment that makes semiconductors would have been a rarity because the combined entity would have been listed in New York and Tokyo but incorporated in the Netherlands, home of ASML, number two in that business sector.

A Tokyo-based mergers and acquisitions lawyer told Reuters that the unraveling of the deal is worse for Tokyo Electron, as “takeover targets often lose management focus, and customers, during the negotiation period.”