Wednesday, March 24, 2021

Applied Materials may kill $3.5B buy of Japanese ALD and CVD Furnace Company Kokusai over delayed approval by China

Applied Materials Inc. on Monday said that its $3.5 billion offer to buy Kokusai Electric Corp. may be terminated because the deal hasn't been able to get timely approval from Chinese regulators. The Santa Clara chip manufacturing equipment company set a March 19 deadline on the deal late in December when it increased how much it would pay KKR HKE Investment L.P. for the Japanese company. The original price was $2.2 billion. But it said on Monday that it will likely now pay KKR a termination fee.


Trouble to reach approval in China has been foreseen by several analysts since the announcement 2019, see below for more details.

  • Kokusai is a small acquisition for Applied materials as compared to the previously failed mega-merger with Tokyo Electron
  • Kokusai, which counts Samsung, SK Hynix, Toshiba, and Micron among its top customers, reported revenue of $1.24 billion as of March 2018.
  • Kokusai’s batch wafer processing tools are less technology-intensive than Applied Materials’ single wafer tools, the recent focus on ultra-thin films has driven renewed interest in this group.
Background: 
  • Impacts of the US-China trade conflict on the semiconductor equipment market and ALD LINK
  • ASM International settles with Kokusai for Batch ALD patent licenses (US$61 million) LINK
  • Applied Materials to buy Japan's Kokusai to boost memory chip business and ALD LINK

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