Applied Materials has agreed to buy its largest rival Tokyo Electron in a deal that creates a company with a combined stock market value of $29 billion.
The move will solidify Applied’s role as the world’s largest semiconductor equipment manufacturing company, supplying big pieces of equipment for the chip factories of Intel, Taiwan Semicondutor Manufacturing, and others. But it could raise concerns of antitrust violations, as the company will have more market share in chip equipment than Intel has in chips.
The companies said they believe they can pass antitrust reviews because they have share in different market segments. But the etching and deposition equipment segments may prompt regulatory reviews. The new company’s name hasn’t been created yet.
Applied Materials ranks as the largest chip equipment maker, followed by ASML, while Japan’s Tokyo Electron is No. 3, according to market researcher Gartner. The remaining rivals include companies like Lam Research and Hitachi.
Under the deal, Tokyo Electron shareholders will receive 3.25 shares of the new company, and Applied Materials shareholders will receive 1 share. That means Applied shareholders will have about 68 percent ownership.
The companies expect the deal to close in the middle to second half of next year. Applied Materials CEO Gary Dickerson will be chief executive of the combined company and Tokyo Electron’s Tetsuro Higashi will become chairman. The companies said in a joint statement they would keep dual listings on NASDAQ and the Tokyo Stock Exchange.