SanDisk, KLA-Tencor Bought In $30 Billion Semiconductor Buying Binge – Forbes

A wave of consolidation in the semiconductor industry is heating up as two deals add to a flurry of mergers among chipmakers seeking to increase their presence in non-personal computer markets like mobile phones, tablets and connected devices.
On Wednesday morning Western Digital unveiled a $19 billion cash and stock takeover of SanDisk , a deal that will increase the combined company’s global scale and products, while also increasing a specialty in non-volatile memory. Western Digital is hoping to vertically integrate into NAND with SanDisk, bolstering its long-term access to solid state technology.

The SanDisk Corp. Connect is displayed for a photograph in San Francisco, California, U.S., on… [+] Friday, Aug. 2, 2013. Photographer: David Paul Morris/Bloomberg

Western Digital will pay $86.50 a share in cash and stock for SanDisk, comprised of $85.10 a share in cash and 0.017 shares of Western Digital per SanDisk share. That deal, which amounts to an over 40% premium to SanDisk’s share price at the beginning of October, hinges on SanDisk closing its acquisition of Unisplendour Corporation. If the Unisplendour doesn’t close prior to Western Digital’s merger with SanDisk, the deal’s terms will be as follows: $67.50 a share in cash and 0.2387 Western Digital shares per SanDisk share.
The combined company is expected to achieve full annual run-rate synergies of $500 million within 18 months after the closing of a deal. The tie-up is expected to be EPS accretive on a non-GAAP basis within 12 months of the deal’s close, Western Digital added. Once a deal is complete, Western Digital expects to continue paying its quarterly dividend, but suspend its share buyback program.
The Western Digital and SanDisk merger came just ahead of a $10.6 billion cash and stock merger between Lam Research and KLC-Tencor. That deal combines Lam Research, a supplier of wafer fabrication equipment, with KLA-Tencor a supplier to the semiconductor, LED and nanoelectronics sectors.
Lam Research will pay $32 a share in cash and 0.5 shares of Lam Research per KLA-Tencor share, equating to about $67.02 a share, or a $10.6 billion equity value. The merger, Lam Research said, will bolster its capability in process and process control, and bolster its scale. The combined company is expected to have $8.7 billion in annual pro forma revenue, and will generate $250 million in annualized cost synergies within 18-to24-months of a deal’s close. By 2020, those synergies shopuld reach an annual run rate of $600 million.
“The pairing of Lam Research and KLA-Tencor brings industry leadership in process and process control together, accelerating our capability to address our customers’ most difficult challenges as they scale to meet the market demands of lower power, higher performance, and smaller form factors,” Martin Anstice, Lam’s CEO said in a statement.
“The combined company will be uniquely positioned to work collaboratively with our customers to help them meet the challenges of FinFET, multi-patterning and 3D NAND development,” said Rick Wallace, CEO of KLA-Tencor. “Given the complementary nature of the two companies’ product offerings and technologies as well as the lack of product overlap, the combination will create an industry leader with greater opportunities for our respective employees for professional development and growth,” Wallace added.
Wednesday’s merger wave in the semiconductor industry comes on the heels of two other large deals. In May, Avago announced a $37 billion takeover of Broadcom , while NXP Semiconductor paid $11.8 billion to acquire Freescale in March.

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