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Advantest offers to buy Verigy for $735 Million
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Wednesday, December 8, 2010
Advantest Corp. has made an unsolicited bid to acquire U.S.-based rival Verigy Inc. for $12.15 per share in cash. The deal is worth $735 million.
''The Verigy board has reviewed the Advantest proposal and determined that it is not superior to Verigy's pending transaction with LTX-Credence,'' Verigy said through a statement. ''However, the Verigy board believes the Advantest proposal might lead to a superior transaction so it has determined to engage in discussions with Advantest. There can be no assurances that any definitive agreement or transaction will result from the Advantest proposal or Verigy's discussions with Advantest.''
As reported, in a major move in the ATE sector, Verigy Inc. has acquired rival LTX-Credence Corp. The combined company will be called Verigy. Verigy itself was formerly part of Agilent Technologies Inc. Agilent spun-out the ATE unit several years ago, thereby forming Verigy. Several years ago, LTX Corp. bought ATE rival Credence Systems Corp., forming LTX-Credence.
Now, Advantest wants to buy Verigy, in a move to compete better with rival Teradyne Inc. Advantest is strong in memory test, but lags in logic. Teradyne is strong in both areas.
''Considering Advantest’s unsolicited bid for Verigy, we believe Advantest views an acquisition of Verigy as strategic in nature and, thus, we would not be surprised to see a higher bid from them. This bid does raise risk to merger with LTX-Credence,'' said C.J. Muse, an analyst with Barclays Capital, in a report.
''This is potentially Advantest’s last shot at obtaining core digital and/or analog technology from either Verigy or LTX-Credence, considering potential antitrust issues once a Verigy/LTX-Credence merger was completed,'' Muse said.
''And with Advantest lagging severely behind Teradye, Verigy, and LTX-Credence in SOC test (more of only CPU test provider to Intel (and AMD), this unsolicited bid for Verigy does make strategic sense. Additionally, the strong Yen doesn’t hurt either,'' he said.
''So what happens to LTX-Credence? From the Verigy's perspective, LTX-Credence's portfolio fits in very well with Verigy's. LTX-Credence's low end digital and analog is precisely what Verigy is missing,'' he said. ''But with Advantest now in the mix and the potential for anti-trust issues to limit the ability of all three companies to merge (which we believe is the best possible outcome), there is clearly greater risk today to the LTX-Credence merger closing,'' he added.
LTX-Credence issued a statement of its own saying it believes the combination of LTX-Credence and Verigy is in the best interests of both companies’ shareholders, customers and employees.
By: DocMemory
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