Thursday, August 25, 2011

Anticipated Closing in October for Varian Semiconductor Equipment Associates

It looks like everything is on track for an October closing with the acquisition of Varian Semiconductor Equipment Associates, Inc. (Ticker: VSEA) by Applied Materials, Inc. (Ticker: AMAT). Applied Materials made the following comments regarding the merger in yesterday’s earnings conference call. Here’s what they said:

“…Over the past 3 months, we've taken a number of important steps towards completing the Varian acquisition. On August 11, Varian shareholders voted to approve the merger, and to date, we have received regulatory clearance from Israel, Germany and Taiwan. We're still awaiting approvals from the U.S. and China. We're committed to closing the transaction, which we now expect to occur in October. We are excited about the opportunities that we will deliver to our customers, shareholders and employees by combining the strengths of these 2 companies.

Cash and investments ended the quarter at $6.8 billion, up $2.2 billion from the second quarter, including the debt proceeds. The elevated level of cash is reflective of our all-cash offer for Varian. We regularly review our capital structure, relative to our capital allocation principles of ensuring a strong investment-grade balance sheet that allows us to fund disciplined investments in the growth of our business while supporting dividend growth, in line with business performance, and use of share repurchase as the preferred means of returning excess cash to shareholders….”

They just need the regulatory OK from U.S. & China and have the cash on hand to pay for the deal. I’m tempted to add to this position as the annualized return is still attractive.


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