KLA-Tencor To Acquire Orbotech
KLA-Tencor to add $2.5 billion of addressable market opportunity in printed circuit board, flat panel display, packaging, and semiconductor manufacturing
KLA-Tencor has entered into a definitive agreement to acquire Orbotech at an equity value of approximately $3.4 billion and an enterprise value of $3.2 billion.
With this acquisition, KLA-Tencor will significantly diversify its revenue base and add $2.5 billion of addressable market opportunity in the high-growth printed circuit board, flat panel display, packaging, and semiconductor manufacturing areas.
"This acquisition is consistent with our strategy to pursue sustained, profitable growth by expanding into adjacent markets," commented Rick Wallace, president and CEO of KLA-Tencor. "This combination will open new market opportunities for KLA-Tencor, and expands our portfolio serving the semiconductor industry."
Wallace continued, "Our companies fit together exceptionally well in terms of people, processes, and technology. In addition, KLA-Tencor has had a strong presence in Israel over the years, and this combination further expands our operations in this important global technology region."
"This acquisition is a true testament to Orbotech's strong leadership and success," said Asher Levy, CEO of Orbotech Ltd. "I firmly believe that this deal benefits our employees and creates additional value for our shareholders. Together with KLA-Tencor, we will significantly increase growth potential, accelerate our product development roadmap, and enhance customer offerings."
Levy added: "Orbotech will continue to operate under the Orbotech brand as a standalone business of KLA-Tencor based in Yavne, Israel."
Total cost synergies are expected to be approximately $50 million a year within 12 to 24 months following the closing of the transaction, and the transaction is expected to be immediately accretive to KLA-Tencor's revenue growth model, non-GAAP earnings and free cash flow per share.
The transaction has been approved by the board of directors of each company and is expected to close before the end of calendar year 2018, subject to approval by Orbotech's shareholders, required regulatory approvals and the satisfaction of the other customary closing conditions.
KLA-Tencor intends to fund the cash portion of the purchase price with cash from the combined company's balance sheet. In addition, KLA-Tencor intends to raise approximately $1 billion in new long-term debt financing to complete the share repurchase.