Merger to create $29bn company

SANTA Clara-based Applied Materials, the largest supplier of chip making equipment, yesterday agreed to pay $9.39bn in stock for rival Tokyo Electron and plans to cut costs amid a slump in demand for semiconductors.

Gary Dickerson will become CEO of the combined company after replacing Mike Splinter on September 1 at Applied Materials, according to a statement from the California-based company and Tokyo Electron. Applied Materials shareholders will own 68% of the new company, according to the companies.

The deal comes after Applied Materials last month forecast revenue that missed analysts’ estimates amid muted semiconductor demand and a record slump in the personal-computer market. Tokyo Electron, the second-largest maker of chip production machines, reported a ¥3bn ($30m) loss for the three months to June 30.

Tokyo Electron shareholders will get 3.25 shares for each share held in the Tokyo-based chipequipment maker, and CEO Tetsuro Higashi becomes chairman of the newly formed company.

The deal, which the companies described as a “merger of equals”, values Tokyo Electron at about 6% more than yesterday’s closing price.

It will create a company worth $29bn.

Applied Materials shareholders will get one share in the new company for each they hold.

The combined company would maintain dual listing on the Nasdaq and Tokyo Stock Exchange, the companies said in yesterday’s joint statement.