Abney Associates advising investors on Applied Materials Inc. the California based supplier of chip making equipment as they are poised to buy Tokyo Electron Ltd. in a deal reportedly worth $9.39 billion.
As rising costs of research and development and the sheer scale of sophistication required for even low power operating devices, continues to rise at a breath-taking rate, the year has seen the contraction of the industry as a whole. This is being brought about primarily by mergers between chip makers and also in conjunction with the companies who manufacture the machinery and components for this industry.
The latest of these mergers is the buyout of 86% of Tokyo Electrons Ltd’s shares by the American Equipment manufacturer Applied Materials Inc. in a stock deal valued at $9.39 billion. This makes this deal the largest buyout of a Japanese company by a foreign concern, since Citigroup Inc’s purchase of Nikko Cordial Corp. in 2007 for $8 billion. The deal is expected to be fully realized by the middle of 2014.
“This is the latest in a series of such deals like the ASML, Cymer purchase and Lam Research and Novellus Systems merger. This deal is described as a merger of equals and this is in effect exactly what it is, something the market’s reaction will attest to. This is really quite a smart arrangement on so many levels on both sides of the Pacific,” said James Carter, Senior Vice President of Mergers and Acquisitions at Abney Associates.
With the merger of the two companies, the combined concern is expected to have cost savings in place of $250 million a year, something that will be in aid of its stated desire to buy back $3 billion dollars’ worth of shares. Shareholders in Tokyo Electron are to be compensated at the rate of 3.25 shares for each currently held share, with those holding Applied Material’s receiving one for one. Shares in Applied Material Inc. traded up as high as $17.24, bringing its ROI for the year to 55.83%.
“This deal is one that has left everyone feeling good about the outcome; the companies are gaining streamlined research and development and decreased operating costs alongside increased production capacity. Both sets of shareholders have been well taken into consideration and with the proposed $3 billion buy back of outstanding shares; the market is more than happy. As a current level investment for the next 14 months, you would be hard pressed to find a more secure platform than this one,” added James Carter, Senior Vice President of Mergers and Acquisitions at Abney Associates.
Abney Associates are a Hong Kong based company that provides a range of financial services to individual clients, portfolio companies, corporate investors and entrepreneurs who wish to take unbiased financial advice.
Abney Associates are primarily a team of financial specialists who pride themselves on having a high level of expertise and vast experience for diligently monitoring any positive or negative developments to companies currently listed on exchanges globally, especially those that may affect client investment interests. This is done in order to ensure the financial advice given is factually correct and delivered in an effective way.