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FEI’s Acquisition of Micrion: Deal Terms, Timing and What Changed

FEI’s Micrion deal combined FEI stock and cash: one FEI share plus $6 per Micrion share. The agreement was signed in 1998 and closed in August 1999.
From TheFinanceBase Team2 min to read
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FEI agreed to acquire Micrion, a Peabody, Massachusetts, supplier of focused-ion-beam (FIB) systems, in a deal announced in 1998. Micrion shareholders were to receive one FEI common share plus $6 in cash for each Micrion share. The merger agreement was signed on December 3, 1998; FEI later reported that the acquisition closed in August 1999.

What did FEI acquire?

Micrion made focused-ion-beam systems—specialized equipment used in semiconductor and related applications. At the time of the announcement, the company was based in Peabody, Massachusetts, and had about 200 employees, according to EE Times’ 1998 report.

FEI said it planned to make Micrion a Peabody-based subsidiary within its operations. The announced rationale was to bring the companies’ products together to offer customers a broader product line and service; that was FEI CEO Vahe Sarkissian’s stated expectation, not a reported measure of the merger’s eventual performance.

How much did FEI pay for Micrion?

The announced consideration was one FEI common share and $6 in cash for each Micrion share. That is the per-share offer reported by EE Times in 1998. The available deal details do not establish a total purchase price, so the per-share terms should not be mistaken for the acquisition’s aggregate value.

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When was the acquisition agreed and completed?

FEI Company, Micrion Corporation, and FEI’s wholly owned Oregon subsidiary, MC Acquisition Corporation, entered into the merger agreement on December 3, 1998. The agreement provided for a statutory merger under the Oregon Business Corporation Act and the Massachusetts Business Corporation Law. FEI’s 2000 annual report records the acquisition as closing in August 1999.

What did the merger mean for Micrion’s business?

FEI’s announced plan was to merge Micrion into its operations as a subsidiary based in Peabody. The announcement therefore described operational integration with a subsidiary structure, rather than stating that Micrion’s location or workforce would immediately disappear. The reported employee count—about 200—describes Micrion at the time of the 1998 announcement; it does not establish how many employees remained after closing.

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What did FEI report after the deal closed?

FEI’s 2000 annual report described the acquisition’s accounting and research-and-development effects. Purchase accounting recognized $16.3 million of existing technology and $24.1 million of goodwill. FEI also identified four significant in-process research and development projects: two aimed at resolution and automation improvements for semiconductor products, one involving automation for data-storage products, and one involving lithography photomask repair.

FEI said none of those projects had been proven technologically feasible or had generated revenue at the acquisition-date evaluation. It consequently recorded a one-time $14.1 million charge for acquired in-process R&D. The company also reported that the acquisition added $2.3 million of R&D costs in 1999 and $6.9 million in 2000; those are annual-report figures for the respective years, not recurring costs stated as a forward estimate.

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Deal facts at a glance

Item Reported detail
Acquirer FEI Company
Company acquired Micrion Corporation, a Peabody, Massachusetts, FIB systems supplier
Announced consideration One FEI common share plus $6 cash per Micrion share, as reported by EE Times in 1998
Merger agreement December 3, 1998
Closing August 1999, according to FEI’s 2000 annual report
Planned integration Micrion to become a Peabody-based FEI subsidiary

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