Chip gear maker ASML buys Cymer for $2.5 billion
The Dutch company said that the cash-and-shares acquisition would speed up the development of extreme ultraviolet (EUV) semiconductor lithography, which will help produce chips to power the next generations of smartphones and tablet computers.
ASML is upgrading its machines to produce these smaller, faster chips. In July, it sold a 23 percent stake to its three biggest customers, Intel, Samsung Electronics and Taiwan Semiconductor Manufacturing, to help finance research into the technology behind its new equipment.
But progress has been slow because of delays to the light technology which Cymer was already supplying to ASML.
"We believe that combining the two companies will definitely speed up the development of this EUV source," said Chief Financial officer Peter Wennink."
ASML will fund the Cymer acquisition, its biggest, three-quarters with shares and quarter in cash. Cymer shareholders will get $20 in cash per Cymer share plus 1.1502 ASML shares.
The total price is a premium of 61 percent over Cymer's recent share price.
The company will pay the $630 million cash component from its 3 billion euros of available reserves and issue new shares for the rest, an ASML spokesman said.
Rabobank analyst Peter Scholte said the deal, which is due to close in the first half of next year, highlights the difficulties in EUV development and is an expensive way for ASML to get it back on track.
ASML said that the deal is expected to boost earnings per share within two years. Bernstein analyst Pierre Ferragu said assuming the deal closes by next March, he'd expect earnings to be diluted for the year by around 4 percent.
A bellwether for Europe's technology sector, ASML also reported lower-than-expected third-quarter orders and said fourth-quarter sales would be at the low end of forecasts. It declined to give a 2013 outlook.
Its trading update echoed the downbeat message from technology peers. Intel, one of ASML's biggest customers, said on Tuesday that its outlook remains weak for the rest of the year because of falling computer sales.
Earlier this month research firm Gartner predicted that worldwide industry spending on chip equipment would slow in 2013 because of deteriorating economies.
ASML's third-quarter order book was 831 million euros, lower than the 899 million euros analysts had forecast.