Veeco Signed Definitive Agreement to Acquire Ultratech

Veeco Instruments Inc., in thin film etch and deposition process equipment, and Ultratech, Inc., supplier of lithography, laser-processing and inspection systems used to manufacture semiconductor devices and LEDs, signed a definitive agreement for Veeco to acquire Ultratech).

The boards of directors of both companies have unanimously approved the transaction.

Ultratech shareholders will receive $21.75 per share in cash and 0.2675 of a share of Veeco common stock for each Ultratech common share outstanding.

Based on Veeco’s closing stock price on February 1, 2017, the transaction consideration is valued at approximately $28.64 per Ultratech share. The implied total transaction value is approximately $815 million and the implied enterprise value is approximately $550 million, net of Ultratech’s net cash balance as of December 31, 2016.

Post transaction it is projected that Ultratech shareholders will own approximately 15% of the combined company.

Ultratech is in lithography products for Advanced Packaging applications and for LEDs and is a pioneer for laser spike anneal technology used for the production of semiconductor devices. In addition, the company offers wafer inspection solutions leveraging its proprietary coherent gradient sensing (CGS) technology which address a variety of semiconductor applications.

“The strategic combination will establish Veeco as a leading equipment supplier in the high growth Advanced Packaging industry. Ultratech’s leadership in lithography together with Veeco’s Precision Surface Processing (PSP) solutions form a strong technology portfolio to address the most critical Advanced Packaging applications. We believe our complementary end market exposure and customer relationships will create the ideal platform to accelerate growth,” said John R. Peeler, Veeco’s chairman and CEO. “Ultratech is a great fit with our strategy to profitably grow our business and diversify our revenue. We expect this transaction to be immediately accretive to adjusted EBITDA and non-GAAP EPS.”

Ultratech chairman and CEO Arthur W. Zafiropoulo said: “Both companies have a strong heritage of developing innovative and cutting-edge technologies. The combined company will create a formidable team to execute against growth opportunities and deliver significant value to customers and shareholders.”

Veeco expects to realize approximately $15 million in annualized run rate synergies within 24 months after closing, to be achieved through increased efficiencies and leveraging the scale of the combined businesses. The combined company is expected to have an efficient balance sheet, benefiting from the deployment of excess cash.

The transaction is expected to close in the second calendar quarter of 2017, subject to approval by Ultratech shareholders, regulatory approvals in the U.S. and other customary closing conditions.

Barclays is acting as financial advisor to Veeco and Morrison & Foerster LLP is acting as legal advisor. BofA Merrill Lynch is acting as financial advisor to Ultratech, and O’Melveny & Myers LLP is acting as legal advisor.