Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Applied Materials, Tokyo Electron terminate proposed merger, (Apr 27, 2015)

By Greg Hammond, J.D.

Applied Materials Inc. and Tokyo Electron Ltd., the two largest competitors that develop and supply high-volume non-lithography semiconductor manufacturing equipment, have abandoned plans to merge after the Justice Department informed the companies that their coordinated remedy proposal would fail to resolve the department’s competitive concerns. Based on the Justice Department’s position, the companies determined that there is “no realistic prospect for the completion of the merger,” according to an Applied Materials statement.

Applied Materials is the largest non-lithography semiconductor manufacturing equipment provider with revenues amounting to roughly $9 billion in 2014. Similarly, Tokyo Electron is the second-largest non-lithography semiconductor manufacturing equipment provider with 2014 revenues amounting to approximately $6 billion.

“The companies’ decision to abandon this merger preserves competition for semiconductor manufacturing equipment,” stated Acting Assistant Attorney General of the Antitrust Division, Renata B. Hesse. “The semiconductor industry is critically important to the American economy, and the proposed remedy would not have replaced the competition eliminated by the merger, particularly with respect to the development of equipment for next-generation semiconductors.”

According to a Tokyo Electron news release, “there remains a gap between the view of Tokyo Electron and Applied Materials and the view of the United States Department of Justice, and it becomes apparent that such gap will not be able to be bridged.”

“We viewed the merger as an opportunity to accelerate our strategy and worked hard to make that happen,” stated president and chief executive officer of Applied Materials, Gary Dickerson. “While we are disappointed that we are not able to pursue this path, our existing growth strategy is compelling. We have been relentlessly driving this strategy forward and we have made significant progress towards our goals. 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.”

Companies: Applied Materials Inc.; Tokyo Electron Ltd.

News: AcquisitionsMergers Antitrust AntitrustDivisionNews