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Chip gear maker ASML buys Cymer for $2.5 billion
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ASML's logo is seen on the day of the presentation of the 2011 fourth quarter and annual results in Veldhoven January 18, 2012.
Credit: Reuters/Robin van Lonkhuijsen/United Photos
By Roberta Cowan
AMSTERDAM |
Wed Oct 17, 2012 8:13am EDT
AMSTERDAM (Reuters) - The world's leading chip gear maker ASML is buying U.S. group Cymer for 1.95 billion euros ($2.5 billion) to get control of a light-based technology crucial to making the smaller, smarter chips of the future.
The Dutch company said that the cash-and-shares acquisition would speed up the development of extreme ultraviolet (EUV) semiconductor lithography, which will help produce chips to power the next generations of smartphones and tablet computers.
ASML is upgrading its machines to produce these smaller, faster chips. In July, it sold a 23 percent stake to its three biggest customers, Intel, Samsung Electronics and Taiwan Semiconductor Manufacturing, to help finance research into the technology behind its new equipment.
But progress has been slow because of delays to the light technology which Cymer was already supplying to ASML.
"We believe that combining the two companies will definitely speed up the development of this EUV source," said Chief Financial officer Peter Wennink."
ASML will fund the Cymer acquisition, its biggest, three-quarters with shares and quarter in cash. Cymer shareholders will get $20 in cash per Cymer share plus 1.1502 ASML shares.
The total price is a premium of 61 percent over Cymer's recent share price.
The company will pay the $630 million cash component from its 3 billion euros of available reserves and issue new shares for the rest, an ASML spokesman said.
Rabobank analyst Peter Scholte said the deal, which is due to close in the first half of next year, highlights the difficulties in EUV development and is an expensive way for ASML to get it back on track.
ASML said that the deal is expected to boost earnings per share within two years. Bernstein analyst Pierre Ferragu said assuming the deal closes by next March, he'd expect earnings to be diluted for the year by around 4 percent.
DOWNBEAT MESSAGE
A bellwether for Europe's technology sector, ASML also reported lower-than-expected third-quarter orders and said fourth-quarter sales would be at the low end of forecasts. It declined to give a 2013 outlook.
Its trading update echoed the downbeat message from technology peers. Intel, one of ASML's biggest customers, said on Tuesday that its outlook remains weak for the rest of the year because of falling computer sales.
Earlier this month research firm Gartner predicted that worldwide industry spending on chip equipment would slow in 2013 because of deteriorating economies.
ASML's third-quarter order book was 831 million euros, lower than the 899 million euros analysts had forecast.
Shares in ASML, which has a market share of more than 80 percent, and competes with Japanese groups Canon and Nikon, hit a record high of 48.34 euros in July after the deal with its top customers. They were down 2 percent at 40.48 euros at 1127 GMT on Wednesday.
Third-quarter net profit was 275 million euros, compared with a forecast 278 million euros. ($1 = 0.7679 euro)
(Additional reporting by Gilbert Kreijger; Editing by Erica Billingham)
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