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Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Applied Materials did not buy Tokyo Electron. The companies announced a proposed all-stock merger of equals on September 24, 2013, valued at approximately $29 billion (¥2.8 trillion), but terminated the agreement on April 26, 2015, after the U.S. Department of Justice said the proposed remedy would not address its competition concerns. The merger never closed.
What the companies proposed
Applied Materials and Tokyo Electron said the combination would bring together semiconductor and display manufacturing technologies and expand their capabilities in precision materials engineering and patterning. They planned to create a new company, with dual headquarters in Santa Clara, California, and Tokyo, and shares listed on Nasdaq and the Tokyo Stock Exchange. Those plans depended on the deal closing; the combined company was never formed. The companies’ September 24, 2013 announcement described the proposed combination as an all-stock merger of equals valued at approximately $29 billion (¥2.8 trillion).
The companies also forecast that the deal would increase earnings and said the combined company intended to launch a $3 billion share repurchase program after completion. These were projections and plans, not results or a buyback that occurred. Tokyo Electron’s announcement described the expected financial benefits and repurchase intention.
Why the $29 billion deal did not go through
The proposal needed shareholder approval and regulatory reviews. In February 2014, the companies announced that the Committee on Foreign Investment in the United States had cleared the transaction without conditions on national-security grounds. That clearance addressed national security; it did not settle other regulatory reviews or the outstanding shareholder approval. The companies’ CFIUS announcement noted that approvals elsewhere and shareholder approval remained necessary.
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The central obstacle became the Justice Department’s antitrust challenge. The DOJ said the two companies were the largest competitors with the know-how, resources, and ability to develop and supply high-volume non-lithography equipment for semiconductor manufacturing. In the agency’s view, the proposed remedy would not replace the competition lost through the merger, especially in developing equipment for next-generation semiconductors. This describes the DOJ’s stated concern, not an independent determination of the relevant market. The DOJ’s April 27, 2015 statement set out that rationale.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Termination and the companies’ scale
On April 26, 2015, Applied Materials and Tokyo Electron terminated their Business Combination Agreement. They said there was no realistic prospect of completing the merger given the DOJ’s position. The termination announcement confirmed that the proposed combination would not proceed. The companies’ termination notice records the decision.
In its 2015 account of the proposed transaction, the DOJ reported that Applied Materials had approximately $9 billion in revenue in 2014 and Tokyo Electron approximately $6 billion that year. Those are each company’s reported revenues for 2014, not the value of the proposed merger or money exchanged in a completed acquisition. The DOJ release includes those figures.
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