UPDATE 1-Axcelis to hold talks with TPG, Sumitomo Heavy

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PHILADELPHIA, June 6 (Reuters) - Axcelis Technologies Inc (ACLS.O) said on Friday it would begin discussions with Sumitomo Heavy Industries Ltd (6302.T) and TPG Capital LP [TPG.UL], which made a $616 million unsolicited takeover bid for the semiconductor-equipment maker.

Axcelis said it would give its suitors access to confidential information. It cautioned there could be no assurance that the discussions would result in a deal.

Japan's Sumitomo Heavy and private equity firm TPG made a $532 million bid for Axcelis in February, and later sweetened the offer to $616 million. Axcelis had rejected the bids, saying the undervalued the company and failed to compensate it for the potential of new products.

Axcelis, which makes ion implantation equipment used to manufacture semiconductors, was spun off from Eaton Corp (ETN.N) in 2000. Sumitomo Heavy, which makes heavy machinery, and Axcelis have a joint venture in Japan called SEN.

Last month, Axcelis said three of its board directors were re-elected but failed to get a majority of the shareholder votes cast.

Shares of Axcelis, which has a market capitalization of $600 million, closed on Thursday at $5.86 a share on Nasdaq. (Reporting by Jessica Hall, editing by Gerald E. McCormick and Derek Caney) (For more M&A news and our DealZone blog, go to here)