Free tools Windows power users keep installed
One-click scans. No signup required.
Applied Materials’ November 2009 offer for Semitool was widely praised by analysts who followed Applied for its strategic fit, but the $11-per-share price disappointed some analysts focused on Semitool. The dispute was less about whether Semitool’s technology fit Applied than whether its shareholders were being paid for the growth they might otherwise have captured.
What Applied offered and when the deal closed
On November 17, 2009, Applied Materials announced an all-cash tender offer of $11 per Semitool share, valuing the company at approximately $364 million on a fully diluted basis. The offer required at least two-thirds (66 2/3%) of Semitool shares to be tendered; a second-step merger at the same price was planned for shares not tendered. Semitool was to become a business unit within Applied’s Silicon Systems Group. Applied Materials’ announcement
More than 94% of Semitool shares had been tendered by December 17. Applied completed the tender offer and then the merger on December 21, 2009. Remaining shares were converted to $11 cash, subject to standard withholding and dissenters’ rights provisions. Applied Materials’ completion announcement
Why analysts saw a strategic fit
Semitool made electrochemical deposition (ECD) equipment for copper, gold, solder and other metals, along with wafer-cleaning, stripping, etching and wafer-transport-container cleaning systems. Its products served both front-end semiconductor fabrication and back-end wafer-level packaging. Applied’s stated rationale was to build in advanced packaging and serve memory makers moving from aluminum interconnects to copper. The acquisition also brought Applied back into ECD, a field in which Novellus was described as the leader at the time. EE Times’ 2009 report
#1 Best Overall
Analysts linked that product overlap to possible customer and market advantages:
- Edwin Mok of Needham called the purchase “strategically important,” saying Semitool’s copper ECD and single-wafer wet-clean tools expanded Applied’s addressable market. He saw potential for the combined company to offer customers a more complete through-silicon-via (TSV) line.
- C.J. Muse of Barclays Capital said Applied appeared to be refocusing on its silicon business and targeting wafer-level packaging as a growth area. He wrote, “We like the acquisition,” while still expecting Applied’s silicon business to grow more slowly than wafer-fab equipment in the next cycle.
- Theodore O’Neill of Kaufman Brothers called it “a great acquisition for Applied,” citing Semitool’s strengths in wafer cleaning and copper plating, areas where Applied had struggled. Mok also called it “a positive for Applied” and “a good fit”; Ben Pang of Carts & Co. said the deal addressed a growing opportunity in wafer-level packaging process equipment. SEC-filed transaction materials
Market opportunity cited at the time
Muse’s 2009 analysis, as reported by EE Times, put Semitool’s 2008 shares at 8% of spray clean, 9% of wafer-level packaging and 24% of copper ECP. The corresponding total addressable markets were $856 million, $954 million and $126 million, respectively. These are historical market estimates, not current market sizes. EE Times’ 2009 report
Applied executives described the wafer-level packaging market in SEC-filed deal materials as growing from $500 million in 2010 to $750 million in 2012. That was a forecast made during the 2009 deal discussion, not a report of realized market growth. SEC-filed transaction materials
Why some analysts questioned the price
The main criticism was that $11 a share might not reflect Semitool’s longer-term growth and profitability potential. The SEC-filed materials described a split in emphasis: analysts covering Applied generally applauded the acquisition, while analysts covering Semitool were disappointed with the offer. Semitool’s revenue had been nearly $240 million in fiscal 2008 and $139 million in the year ended September 30, 2009, illustrating how sharply the downturn had affected the business. SEC-filed transaction materials
Quick wins for a faster PC:
Clear out junk files and repair common Windows errorsFree Scan →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Matt Petkun, a senior research analyst at D.A. Davidson, captured both sides: “To a certain extent this is disappointing; it’s a price below what we thought Semitool was capable of getting.” He also said, “On Applied’s part this is very smart.” Petkun’s concern was that Semitool had strong recent business but had not yet seen the related earnings growth. He noted that the downturn had forced unusually severe cost reductions because Semitool was relatively vertically integrated. SEC-filed transaction materials
That disagreement reflects different reference points: Applied-focused analysts emphasized the strategic capability and opportunity Applied could acquire, while the price skeptics emphasized what Semitool might earn if markets recovered and its investments matured. The available contemporaneous comments establish the debate, not whether $11 ultimately proved fair by a later measure.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Execution risks beyond the price
Dean Freeman of Gartner questioned whether Applied could preserve the entrepreneurial approach that had helped Semitool develop niche products. He also pointed to the semiconductor-equipment industry’s mixed acquisition record and asked whether Applied could integrate Semitool as the TSV market entered a growth phase. EE Times’ 2009 report
Those concerns made execution central to the deal thesis. Applied needed to combine Semitool’s specialized ECD and wet-processing products with its broader equipment business without losing the innovation and customer responsiveness that made those products valuable. The deal also arrived amid a severe industry downturn, so the anticipated benefits depended on both integration and a recovery in relevant markets.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
Best Value
What the analyst comments do—and do not—show
The contemporaneous record points to broad approval of the strategic logic among analysts covering Applied, alongside a clear price objection among some Semitool-side observers. It does not establish a later return for either company’s shareholders or prove whether the expected growth and integration benefits materialized. The analysts were assessing the offer and its prospects in 2009, not delivering a retrospective performance verdict.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
