(Recasts, adds details, KLA stock price)
By Philip Blenkinsop and Duncan Martell
BRUSSELS/SAN FRANCISCO Feb 21 KLA-Tencor Corp
(KLAC.O), the microchip testing equipment maker, on Thursday
agreed to buy Belgian peer ICOS Vision Systems Corp NV
IVIS.BR for $467 million in cash, broadening its range of
products to go after the fast-growing solar panel market.
ICOS makes visual inspection equipment for semiconductor
packaging and also seeks to build a presence in control of
wafers. It also provides inspection machines for solar cells
and LED lighting. Shares of both companies rose on the news.
"Our two companies serve adjacent markets and offer
complementary technologies," said KLA Chief Executive Rick
Wallace, adding that the merger would allow KLA-Tencor to grow
outside its primary chip fabrication market.
The combination would give KLA a far larger footprint in
the chip packaging inspection business and boost its presence
in fast-growing markets such as solar panels and LED lighting,
broadening its revenue base.
Steve Babureck, analyst at Exane BNP Paribas in Paris, said
the deal looked good for KLA-Tencor, both in terms of price --
given that ICOS shares hit a two-and-a-half year low last week
-- and in terms of products.
"KLA-Tencor is the inspection leader in the front end, ICOS
in the back end. It also gives them entry into green tech, with
the LED and solar inspection sector," he said.
In pushing into solar technologies, KLA-Tencor would be
following peers such as Applied Materials Inc (AMAT.O) and
Tokyo Electron Ltd (8035.T). Solar energy-related stocks were
high-flyers last year, but have dropped sharply in 2008 after a
run-up in 2007 and amid the global equity sell-off early this
'A DONE DEAL'
Eric de Graaf, analyst at Petercam in Amsterdam, said the
price was also fair for ICOS shareholders.
"It's a done deal ... It could take at least a year or two
years to get to that level," he said.
The companies said in a joint statement that KLA-Tencor was
offering 36.50 euros per ICOS share, a 35 percent premium over
the Belgian company's closing price over the past 90 days.
ICOS shares, whose trading was temporarily suspended,
soared 60 percent at 35.52 euros, returning to a level last
seen in July 2007. Shares of KLA-Tencor rose $1.34, or 3.2
percent, to $43.50 on Nasdaq.
ICOS CEO Anton De Proft told a conference call that board
members who held some 20 percent to 25 percent of the company
had backed the offer. He said the combination would let ICOS
grow faster in new initiatives already underway.
KLA-Tencor said the transaction would add to its earnings
per share in the first year.
The companies said the net transaction was valued at 316.9
million euros, excluding shares ICOS itself holds and its
The deal is expected to close in the second quarter of
2008, assuming 85 percent of ICOS's outstanding shares are
tendered and it encounters no regulatory problems.
Since the vast majority of ICOS shares are floating,
KLA-Tencor will need to woo a large number of individual
shareholders rather than a group of key investors.
Separately on Thursday, ICOS announced fourth-quarter
results broadly in line with expectations and said it would
stop its share repurchase program in light of the takeover.
(Reporting by Philip Blenkinsop; Editing by David