Summary
KLA Corp (KLAC) announced a significant development with the entry into a definitive Agreement and Plan of Merger with Orbotech Ltd. on March 18, 2018. This transaction will result in KLA Corp acquiring Orbotech through a merger whereby Orbotech will survive. The deal terms involve each Orbotech ordinary share being converted into a combination of cash ($38.86 per share) and KLA Corp common stock (0.25 shares per share), indicating a mixed-consideration acquisition. The transaction has received approval from the Boards of Directors of both companies and is subject to customary closing conditions, including antitrust approvals (Hart-Scott-Rodino) and shareholder approval from Orbotech. Importantly, the acquisition is not subject to any financing condition, suggesting KLA Corp has the necessary resources or existing financing in place. In addition to the acquisition announcement, KLA Corp also disclosed a new $2 billion stock repurchase program, with $1 billion of this program contingent on the closing of the Orbotech merger. This strategic move demonstrates KLA Corp's commitment to returning capital to shareholders while simultaneously pursuing growth through acquisition. Investors should closely monitor the progress of regulatory approvals and Orbotech shareholder vote, as these are key gating items for the completion of the acquisition and the subsequent initiation of the contingent portion of the stock buyback.
Key Highlights
- 1KLA Corp (KLAC) has entered into a definitive Agreement and Plan of Merger with Orbotech Ltd. to acquire the company.
- 2The acquisition will be a mixed-consideration deal, with Orbotech shareholders receiving $38.86 in cash and 0.25 shares of KLA Corp common stock per Orbotech share.
- 3Both KLA Corp and Orbotech Boards of Directors have approved the merger agreement.
- 4Key closing conditions include obtaining antitrust approvals (e.g., Hart-Scott-Rodino) and approval from Orbotech shareholders.
- 5The transaction is not contingent on KLA Corp securing financing.
- 6KLA Corp announced a new $2 billion stock repurchase program, with $1 billion conditional on the merger's closing.
- 7The merger agreement includes customary representations, warranties, and covenants, with a termination fee for Orbotech under certain circumstances.