KLA-Tencor to Acquire Orbotech for $3.4 Billion
19 March, 2018
The transaction has been approved by the Board of Directors of each company. Orbotech will continue to operate under the Orbotech brand as a standalone business of KLA-Tencor based in Yavne, Israel
KLA-Tencor and Orbotech from Yavne, Israel announced they have entered into a definitive agreement pursuant to which KLA-Tencor will acquire Orbotech for $3.4 billion in cash and common stocks. The acquisition will diversify KLA-Tencor’s revenue base and add $2.5 billion of addressable market in the high-growth printed circuit board (PCB), flat panel display (FPD), packaging, and semiconductor manufacturing.
“This combination will open new market opportunities for KLA-Tencor,” said Rick Wallace, President and Chief Executive Officer of KLA-Tencor. “Our companies fit together exceptionally well in terms of people, processes, and technology. KLA-Tencor has had a strong presence in Israel, and this combination further expands our operations in this important global technology region.”
Asher Levy, Chief Executive Officer of Orbotech, said: “Together with KLA-Tencor, we will significantly increase growth potential, accelerate our product development roadmap. Orbotech will continue to operate under the Orbotech brand as a standalone business of KLA-Tencor based in Yavne, Israel.”
$1 billion debt
The transaction has been approved by the Board of Directors of each company and is expected to close before the end of calendar year 2018, subject to approval by Orbotech’s shareholders, and regulatory approvals. KLA-Tencor intends to fund the cash portion of the purchase price with cash from the combined company’s balance sheet. In addition, KLA-Tencor intends to raise approximately $1 billion in new long-term debt financing to complete the share repurchase.
Currently, KLA-Tencor operates a 530 employees research and production facility in Migdal Ha’emek, Israel, responsible for its Wafer inspection and Semiconductors metrology systems. Orbotech employs approximately 2,500 employees. It provides solutions for use in the manufacture of printed circuit boards (PCBs), flat panel displays (FPDs), and semiconductor devices (SDs). Orbotech’s core business lies in enabling electronic device manufacturers to inspect and understand PCBs and FPDs and to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits.
It also provides vacuum deposition and etching processes in SD and semiconductor manufacturing. Revenues for the full year of 2017 totaled $900.9 million, compared with $806.4 million for the full year of 2016. The Company expects first half 2018 revenues to be approximately $500 million.