2 February 2017

Veeco to acquire Ultratech for $815m

Epitaxial deposition and process equipment maker Veeco Instruments Inc of Plainview, NY, USA (which provides MOCVD, MBE, ion beam, wet etch single-wafer processing and other thin-film process technologies) has signed a definitive agreement to acquire Ultratech Inc of San Jose, CA, USA, which designs and makes lithography, laser-processing and inspection systems used to manufacture microelectronic devices and LEDs. The boards of directors of both firms have unanimously approved the deal.

Ultratech shareholders will receive (i) $21.75 per share in cash and (ii) 0.2675 of a share of Veeco common stock for each Ultratech share outstanding. Based on Veeco's closing stock price on 1 February, the transaction is valued at about $28.64 per Ultratech share. The total transaction is hence valued at about $815m and the implied enterprise value is $550m, net of Ultratech's cash balance at end-December 2016. Post transaction, it is projected that Ultratech shareholders will own about 15% of the combined firm.

Ultratech provides lithography equipment for advanced packaging applications and for LEDs, and is a pioneer in laser spike anneal technology used for the production of microelectronic devices. In addition, it offers wafer inspection solutions leveraging its proprietary coherent gradient sensing (CGS) technology that address a wide variety of semiconductor applications.

"The strategic combination will establish Veeco as a leading equipment supplier in the high-growth advanced packaging industry," reckons Veeco's chairman & CEO John R. Peeler. "Ultratech's leadership in lithography together with Veeco's Precision Surface Processing (PSP) solutions form a strong technology portfolio to address the most critical advanced packaging applications," he adds. "Our complementary end-market exposure and customer relationships will create the ideal platform to accelerate growth," he believes. "Ultratech is a great fit with our strategy to profitably grow our business and diversify our revenue. We expect this transaction to be immediately accretive to adjusted EBITDA and non-GAAP EPS," concludes Peeler.

"Both companies have a strong heritage of developing innovative and cutting-edge technologies," comments Ultratech's chairman & CEO Arthur W. Zafiropoulo. "The combined company will create a formidable team to execute against growth opportunities and deliver significant value to customers and shareholders," he believes.

Veeco expects to realize about $15m in annualized run-rate synergies within 24 months after closing the acquisition (expected in second-quarter 2017, subject to approval by Ultratech shareholders, regulatory approvals in the USA, and other customary closing conditions). This should be achieved through increased efficiencies and leveraging the scale of the combined businesses. The combined firm is expected to have an efficient balance sheet, benefiting from the deployment of excess cash.

Tags: Veeco MOCVD MBE Wet processing Ultratech Lithography steppers

Visit: www.ultratech.com

Visit: www.veeco.com