Why did KLA Corp terminate its merger agreement with Lam Research?

The merger agreement was terminated because the U.S. Department of Justice (DOJ) indicated it would not proceed with a consent decree that the parties had been negotiating. Without the DOJ's approval through a consent decree, continuing with the merger was deemed not to be in the best interests of KLA Corp's and Lam Research's respective stakeholders.

Are there any financial penalties for terminating the merger agreement?

No, there are no termination fees payable by either KLA Corp or Lam Research in connection with the termination of the Merger Agreement. The termination was a mutual decision based on regulatory concerns.

What is the impact of this announcement on KLA Corp's dividend?

KLA Corp announced a positive development for its shareholders: the board of directors authorized an increase in the quarterly dividend from $0.52 to $0.54 per share. This increase is expected to be effective starting with the dividend declared in November 2016.

When was the original merger agreement announced?

The original Agreement and Plan of Merger and Reorganization between KLA-Tencor Corporation (now KLA Corp) and Lam Research Corporation was announced and dated as of October 20, 2015.

KLAC 8-K: Material Agreements

Summary

KLA Corp (KLAC) filed an 8-K on October 5, 2016, announcing the termination of its merger agreement with Lam Research Corporation. This decision was prompted by the U.S. Department of Justice's (DOJ) indication that it would not proceed with a consent decree, making the continuation of the merger unfavorable for both companies' stakeholders. Importantly, neither KLA Corp nor Lam Research will incur any termination fees as a result of this mutual agreement to end the deal, which was originally announced in October 2015. In a separate, positive development for shareholders, KLA Corp also announced that its board of directors has authorized an increase in the quarterly dividend per share from $0.52 to $0.54. This dividend increase is scheduled to take effect with the dividend declared in November 2016, signaling continued confidence in the company's financial health and commitment to returning capital to its investors.

Key Highlights

1Termination of Merger Agreement with Lam Research Corporation (originally announced Oct 2015).
2Reason for termination: DOJ would not proceed with a consent decree, making the merger not in stakeholders' best interests.
3No termination fees will be paid by KLA Corp or Lam Research.
4Board of Directors authorized an increase in the quarterly dividend.
5Quarterly dividend per share increased from $0.52 to $0.54.
6Dividend increase expected to take effect with the dividend declared in November 2016.

KLA CORP 8-K Report, Agreement Terminated (Oct 6, 2016)

Summary

Key Highlights

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