KLA-Tencor Corp (NASDAQ:KLAC) has announced signing an agreement to acquire Orbotech Ltd (NASDAQ:ORBK). Orbotech is an Israeli-based company that specializes in developing means of enhancing the manufacturing of electronic products. KLA-Tencor Corp says it is acquiring Orbotech in a bid to diversify its sources of growth.
KLA will purchase Orbotech for around $69.02 per share through a combination of stock and cash, according. This is according to a statement released on Monday. Following the acquisition, Orbotech will have an equity value of around $3.4 billion which represents a 15 percent premium over Friday’s closing price.
Chief executive officer at KLA Rick Wallace said that the acquisition is in line with his company’s strategy to pursue sustained and profitable growth by venturing into adjacent markets. He added that the two companies are compatible in terms of processes, people and technology.
Following the announcement, Orbotech’s shares which has doubled in the last one year, went up by 7.6 percent to trade at $64.42.
The deal received the blessing of Israeli Prime Minister Benjamin Netanyahu, who has been very vocal about the development and use of technology in the country. In a Twitter feed, the Prime Minister said the deal is good news for the hi-tech industry as well as the country’s economy at large. He noted that he is pleased to hear that the company will continue operate from Israel.
The total costs from the deal are expected to hot $50 million and they will be reached in two years after sealing the deal. The deal will be immediately accretive to the revenue of KLA, free cash flow and adjusted earnings. The deal will be closed before end of this year.
Asher Levy, the CEO of Orbotech said the agreement is in line with Orbotech’s in the global market in which it operates plus the strength of the company’s model. He said the deal strengthens the chances of the new formed company to withstand the large and strong waves which are expected in a few coming years. KLA, which specializes in the production of semiconductor and which is based in Milpitas, California has also announced that it will repurchase $2 billion of its own shares.