Sumitomo eyes Axcelis talks as board under fire

By Anupreeta Das

SAN FRANCISCO (Reuters) - Sumitomo Heavy Industries Ltd (6302.T: Quote, Profile, Research, Stock Buzz) responded to signs of shareholder discontent at Axcelis Technologies Inc (ACLS.O: Quote, Profile, Research, Stock Buzz) on Thursday by reiterating its interest in buying the U.S. semiconductor equipment maker.

Axcelis had said on Thursday that three of its board directors were re-elected but failed to get a majority of the votes cast, and a spokesman for the Japanese company then said it was willing to immediately start talks to negotiate a transaction. Axcelis shares rose as much as 6 percent.

Sterling Capital Management, which owns about 12 percent of Axcelis, had said in March it would withhold votes due to differences over how the Axcelis board views Sumitomo's offer.

Axcelis rejected a sweetened $616 million offer from Sumitomo (SHI) in March, saying it undervalued the company and failed to compensate it for the potential of new products.

Axcelis, based in Beverly, Massachusetts, north of Boston, makes ion implantation equipment used in manufacturing semiconductors; Sumitomo makes heavy machinery.

"Axcelis has clearly communicated its willingness to enter into confidential discussions with SHI to explore whether we could reach a mutually beneficial transaction to optimize return to our shareholders," said Axcelis spokeswoman Andrea Calise.

But so far, the two sides have been unable to reach a non-disclosure agreement because Sumitomo has been unwilling to keep any discussions confidential, she added.

Sumitomo, whose bid is backed by private equity firm TPG TPG.UL, has said the conditions, which include stopping public statements and discussions with shareholders about the talks, would make it tough to pursue good-faith negotiations.