Summary
Applied Materials, Inc. (AMAT) announced on July 1, 2019, the entry into a definitive Share Purchase Agreement to acquire Kokusai Electric Corporation (the "Company") for $2.2 billion in cash. This strategic acquisition aims to integrate the Company into Applied Materials, making it a wholly-owned subsidiary. The transaction is expected to be financed through a combination of balance sheet cash and a term loan facility, and is subject to customary closing conditions, including regulatory approvals, with a target completion date of June 30, 2020, potentially extended. The acquisition is anticipated to bolster Applied Materials' strategic position, product and service offerings within the semiconductor and services markets. Management expects the deal to enhance its ability to serve customer requirements and deliver long-term value to stockholders. Investors should note that the deal includes customary representations, warranties, and covenants, with a termination fee of $154 million payable by Applied Materials under specific circumstances, particularly related to the failure to obtain regulatory approvals.
Key Highlights
- 1Applied Materials agrees to acquire Kokusai Electric Corporation for $2.2 billion in cash.
- 2The acquisition is structured as a purchase of all common shares, making Kokusai Electric a wholly-owned subsidiary of Applied Materials.
- 3Financing for the transaction will be a mix of balance sheet cash and a new term loan facility.
- 4The closing is contingent upon customary conditions, including significant regulatory and governmental approvals.
- 5A termination fee of $154 million is applicable if regulatory approvals are not obtained under certain conditions.
- 6The deal is expected to close by June 30, 2020, with possible extensions related to regulatory timelines.
- 7Applied Materials anticipates strategic benefits, including an enhanced market position and improved customer service capabilities.