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Veeco to Buy FEI for About $794M

July 12, 2002

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WOODBURY, N.Y. (AP) _ Veeco Instruments Inc. said Friday it will buy a rival maker of semiconductor-equipment, FEI Co. in a stock deal valued at about $794 million.

The deal is designed to consolidate the companies’ position in the emerging field of metrology _ equipment used to measure the microscopic layers of metals and other materials on chips, disk drives and other products.

The combined company, called Veeco FEI, would be the third-largest metrology company in the United States, Veeco said.

Woodbury-based Veeco had revenue of $449 million last year. FEI, which is based in Hillsboro, Ore., brought in $376 million.

Veeco has made 11 acquisitions or technology investments since 1997, the Wall Street Journal reported. The company is aiming to take on the top five makers of semiconductor-manufacturing equipment _ an industry dominated by Applied Materials.

Veeco is offering 1.355 of its shares for each share of FEI. At Thursday’s closing prices, the total value of the offer was about $1 billion, a 38 percent premium on FEI’s market value.

Shares of Veeco closed Friday on the Nasdaq Stock Market at $18.05, down $4.44, or 20 percent, making the deal worth $794 million.

Shares of FEI ended at $24.01, up $1.95, or 8.8 percent.

Vahe A. Sarkissian, FEI chairman, president and chief executive, will become chairman and chief strategy officer of the new Veeco FEI.

Edward H. Braun, Veeco chairman, president and chief executive, will remain chief executive and president.

The transaction was approved by both boards.

Veeco said the deal should close in the fourth quarter.

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