Lithography innovator ASML is to acquire all outstanding shares of Cymer in a cash-and-stock transaction currently valued at € 1.95 billion.

Cymer, Inc. is a supplier of lithography light sources used by chipmakers to manufacture advanced semiconductor devices. The purpose of the acquisition is to accelerate the development of Extreme Ultraviolet (EUV) semiconductor lithography technology.

EUV is vital to support the semiconductor industry's transition to the next manufacturing technology. This is needed to create microchips with more functions at a lower cost and that are more energy-efficient, consistent with Moore's Law.

ASML and Cymer have collaborated closely for over a year, and this merger is the natural evolution of their existing cooperation in developing EUV technology. Combining Cymer's expertise in EUV light sources with ASML's expertise in lithography systems design and integration should accelerate the introduction of this extremely complex technology.

The transaction, which was unanimously approved by the boards of directors of ASML and Cymer, would entitle each Cymer shareholder to receive US$20.00 in cash and a fixed ratio of 1.1502 ASML ordinary shares per Cymer share. The total price reflects a premium of 61 percent over Cymer's 30-day volume-weighted average price (VWAP) and 52 percent over its 90-day VWAP, using ASML's VWAP for the comparable period ending 16^th October 2012.

"We believe that this transaction will improve our capabilities to bring new technologies to our customers, and will deliver value to Cymer's and ASML's shareholders," says Eric Meurice, President and Chief Executive Officer of ASML. "We expect the merger to make EUV technology development significantly more efficient and simplify the supply chain and integration flow of the EUV modules. We are also very much encouraged by the opportunities that we expect to create around Cymer's growing advanced Immersion systems and dry Deep Ultraviolet (DUV) Installed Base Products (IBP) business."

"Over the last several years, Cymer has been investing significant capital towards developing EUV source technology. We are very encouraged that ASML's resources will enable the combined company to continue to develop and successfully commercialise EUV on an accelerated time frame," continues Bob Akins, Chairman and Chief Executive Officer of Cymer.

"The success of EUV is critical to the semiconductor industry, and we view this merger as very attractive for our shareholders, customers and employees as well as our industry," adds Akins.

As a result of the transaction, ASML will also acquire Cymer's DUV business. This technology is expected to remain a significant and growing engine of sales and profit and will be well positioned to support and balance customer needs for EUV and immersion multiple patterning.

ASML intends to manage Cymer's commercial operations as an independent division based in the United States, and will continue to deliver and service DUV and EUV sources for all customers on an arm's length basis. ASML scanners will continue to interface with light sources from all manufacturers.

The transaction is expected to close in the first half of 2013 and is subject to customary closing conditions, including review by U.S. and international regulators and approval by Cymer's shareholders. Excluding non-cash purchase price accounting adjustments, the transaction is expected to be accretive to ASML's EPS in the second year after closing.

ASML's 6 pre-production NXE:3100 EUV systems are capable of resolution performance compatible with the 22nm node in single patterning mode. They have exposed more than 23,000 wafers at customer sites with good overlay and imaging performance, enabling semiconductor device recipe development and confirmation of infrastructure progress.

The successor system, the NXE:3300B, is capable of resolution performance compatible with the 14nm node in single patterning mode. This system has already shown overlay down to 1.3nm and imaging down to 16nm in a full-field single exposure using new illumination technology.

Progress continues on improving the productivity of the EUV systems currently limited by the light source. Cymer's EUV light sources have for some time been exposing wafers at up to 11W (Watts) source power at customer facilities, resulting in NXE:3100 productivity of up to 7 wafers per hour.

ASML and Cymer jointly made significant progress during the summer and have now proven in laboratories a sustained 30W source exposure power potential, which would enable the NXE:3300B to expose 18 wafers per hour. ASML's specified target remains at 105W or 69 wafers per hour (wph), to be achieved for 2014 microchip production. ASML and Cymer have been cooperating very closely for more than a year on a number of development tasks.

The transaction is a natural next step from the R&D collaboration and will make the cooperation more efficient by knitting development teams closer together, streamlining project management and simplifying the supply chain.

ASML and Cymer say deliveries of the first 11 NXE:3300B systems will be in 2013 for R&D applications.

Production orders for NXE:3300B systems will be in 2014 at a minimum specification of 69 wph. ASML has currently received 4 commitments and expects another 4 to 8 within the next 6 months.