Lam Research to acquire Novellus Systems for $3.3 bn

Chip equipment maker Lam Research Corp, yesterday agreed to acquire smaller rival Novellus Systems Inc for $3.3 billion in an all stock deal, in order to better compete with market leader Applied Materials Inc.

Novellus shareholders will get $44.42 per share, at an exchange ratio of 1.125 shares of Lam for each Novellus share, a premium of about 28 per cent to Novellus's closing price of $34.70 yesterday.

Post-closing, Lam shareholders will own 59 per cent of the combined company and Novellus shareholders the remaining 41 per cent. Lam also announced a $1.6-billion share buyback.

Lam Research and Novellus Systems are among the world's largest manufacturers of semiconductor equipment, with both companies playing a pivotal role in defining the features and capabilities of next-generation devices.

Lam, based in Fremont, California, is a major supplier of wafer fabrication equipment and services to the world's semiconductor industry, and is a leader in plasma etch and single-wafer clean technology, while San Jose, California-based Novellus is a leader in thin-film deposition and surface preparation technologies.

The combined company will be well-positioned to lead the industry through critical technology transitions including 3D structures in advanced logic and NAND memory as well as the scaling to 450 mm wafers. The combined company will also be positioned to expand its revenue at a faster rate than either company could achieve individually.