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Lam Research to Acquire KLA-Tencor

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Dec. 4 2020, Updated 10:52 a.m. ET

Acquisition valued at $10.6 billion

On October 21, 2015, Lam Research (LRCX) and KLA-Tencor (KLAC) announced that they had entered into a definitive agreement enabling Lam Research to acquire all outstanding KLA-Tencor shares in a cash and stock transaction valued at $10.6 billion. As per the agreement, KLA-Tencor’s shareholders “will be entitled to elect to receive for the shares of KLA-Tencor stock they hold the economic equivalent of $32.00 in cash and 0.5 of a share of Lam Research common stock, in all-cash, all-stock, or mixed consideration, subject to proration as more fully described in the merger agreement.”

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Benefits of the acquisition

The acquisition is expected to create great capability in process control, delivering optimized results in partnership with customers. The combined company expects to realize $250 million in cost synergies within the next 18 to 24 months of the acquisition.

“I strongly believe that this transaction represents a great outcome for all of KLA-Tencor’s key stakeholders,” said Rick Wallace, president and chief executive officer of KLA-Tencor. “The combined company will be uniquely positioned to work collaboratively with our customers to help them meet the challenges of FinFET, multi-patterning and 3D NAND development. Given the complementary nature of the two companies’ product offerings and technologies as well as the lack of product overlap, the combination will create an industry leader with greater opportunities for our respective employees for professional development and growth.”

Fiscal 2015 acquisitions in the semiconductor space

On October 14, 2015, shares of SanDisk (SNDK) rose by 10% on reports that the firm had hired an investment bank to explore a potential sale of the company. Micron Tech (MU) was also reported to be interested in acquiring SanDisk.

KLA-Tencor constitutes ~2.4% of the iShares PHLX Semiconductor ETF (SOXX) and 0.84% of the VanEck Vectors Semiconductor ETF (SMH).

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