|
|
|
FEI, Micrion To Merge Virtual FIB monopoly created by $52.9M deal hillsboro, ore. and peabody, mass. -- Gear makers appear to be applying the accelerator to industry consolidation trends with close to two deals made per week. After SpeedFam reached a merger deal with IPEC and PRI Automation acquired MES software supplier Promis Systems last week, FEI Company and Micrion Corp. signed a merger agreement on Thursday, December 3, under which Micrion will merge with a subsidiary of FEI. Meanwhile, AG Associates revealed that it is in negotiations with Steag Electronic Systems, GmbH to be acquired by the German company (see story page 34). In its merger with FEI, Micrion shareholders will receive one share of FEI common stock and $6 in cash (or, in certain limited circumstances, an equivalent amount of shares of FEI common stock in lieu of cash) in exchange for each share of Micrion common stock. Based on the stock prices and Micrion's 4,070,000 outstanding shares, the deal would be worth $52.9 million. Micrion designs, manufactures and markets focused ion beam (FIB) workstations, including FIB instruments used for semiconductor mask repair. The FIB maker has approximately 200 employees. FEI supplies charged particle beam systems, including FIB systems, scanning electron microscopes, transmission electron microscopes and components for submicron-level imaging, analysis, modification and fabrication. The deal sent shares of Micrion up $3.5625 to $10.8125 at Thursday's close on the Nasdaq National market. It was a welcome sight for Micrion shareholders. In the past year Micrion has seen its market value drop sharply from its 52-week high of $23 on Dec. 8, 1997, to as low as $4.75 on Sept. 9, 1998. Meanwhile, FEI shares fell $1.125 to $7 on Thursday. Should the FEI/Micrion merger be consummated, it would create a virtual monopoly in the focused ion beam market. While Seiko Instruments, Advantest and Schlumberger are all players in the market, only Seiko competes on the wafer side of inspection. According to G. Dan Hutcheson, president of VLSI Research, Seiko has stepped back from the overall market, choosing to focus on Japan. Based on 1997 figures, VLSI Research estimates that Micrion controls 50 percent of the circuit modification tools market. The firm calculates that FEI maintains a 30 percent stake in the market. Seiko and the rest of the market hold 10 percent and 10 percent respectively. VLSI Research pegs circuit modification tools as a little more than a $100 million market. Once fierce competitors, FEI/Micrion would therefore have a stranglehold on the FIB tools market. "They have been beating each other up in FIB," says Hutcheson, with FEI starting in the lower end of the market and moving up while Micrion has always been at the high end. "KLA and Tencor used to beat each other up until they realized what their customers already knew which was that they had complimentary products," explains Hutcheson. Customers have been clamoring for more integrated solutions to their problems. These companies have also expressed an interest in dealing with fewer companies. Combining FEI's portfolio and Micrion's high-end FIB point tools, makes FEI "a one-stop shop for this part of the business" An interesting twist to the acquisition of Micrion is the role of FEI majority shareholder, Philips Business Electronics International. In connection with the transaction, Philips Business Electronics, a wholly owned subsidiary of Royal Philips Electronics, has agreed to finance the cash portion of the merger consideration through the purchase of additional shares of common stock from FEI. Philips Business Electronics has the option to purchase additional newly issued shares to maintain its majority shareholder position after the issuance of shares to the Micrion shareholders. The stock purchase agreement between FEI and Philips Business Electronics is subject to certain conditions and if the stock purchase is not consummated, FEI and Micrion may complete the merger with each Micrion shareholder receiving one share of FEI common stock and the equivalent of $6.00 in additional shares of FEI common stock. FEI Company will maintain its corporate headquarters in Hillsboro, Ore., and also will operate the Micrion facility located in Peabody, Mass. FEI has approximately 1,000 employees worldwide, with manufacturing operations located in Hillsboro; Eindhoven, the Netherlands; and Brno, Czech Republic. |