ASML to Acquire Taiwan’s Hermes Microvision for $3.1 Billion

  • Chip equipment maker to finance deal with cash, debt and stock
  • Aquisition adds technology for making smaller semiconductors

ASML Holding NV, one of the biggest producers of chipmaking equipment, agreed to buy Taiwan-based Hermes Microvision Inc. for about NT$100 billion ($3.1 billion) to add technology for creating smaller and more advanced semiconductors.

ASML, based in Veldhoven, Netherlands, is paying NT$1,410 per share in cash, or 31 percent more than Hermes Microvision’s average price in the past 30 days, the companies said in a statement Thursday.

Chip equipment makers are consolidating to acquire the scale needed to cope with the increasing cost of the fundamental technology that goes into semiconductors. That also puts them in a better position to negotiate with the few companies that can still afford to build leading-edge production facilities. Just three customers, Intel Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., account for the majority of spending.

The Dutch manufacturer is the industry leader in lithography machines that etch the lines into materials deposited on silicon disks, which create the tiny circuits that enable chips to process complex computations. For most of the past decade, ASML has been touting extreme ultraviolet lithography systems, which can produce smaller chips while increasing capacity and speed. Hermes Microvision’s equipment checks that steps in the manufacturing have been properly completed.

Unlike some more recent deals in semiconductor production equipment, which focused on cost synergies, the acquisition of Hermes Microvision is about technology, Morgan Stanley analysts said in a note to clients.

“We believe this is a strong sign of confidence in the future of EUV and we still expect good news on the order side in the next several months,” they said.

Debt Funding

Hermes Microvision shares climbed 9.9 percent in Taipei, hitting the daily limit. Shares of Nikon Corp., which competes with ASML, ended the day 2.8 percent lower at 1,408 yen in Tokyo. ASML shares were up 0.2 percent to 84.07 euros at 4 p.m. in Amsterdam.

ASML is financing its purchase with cash, about 1.5 billion euros ($1.7 billion) of debt and 500 million euros of ASML stock that will be bought by Hermes Microvision’s main shareholder and the Taiwanese company’s executives. Part of the proceeds will be reinvested in Hermes Microvision, and ASML said the deal will immediately add to its per-share earnings.

The price tag isn’t too high as Hermes Microvision isn’t yet fully mature, Edwin de Jong, an analyst for SNS Securities, said in a note to clients. Hermes’s technology adds value to ASML’s existing products, adds yield through a new machine and its management is participating by buying ASML stock, he said.

“Financially, HMI is extremely profitable and will add value to ASML shareholders within a couple of years,” he said.

While the companies have worked together for almost two years, ASML started negotiations to acquire the Taiwanese firm toward the end of last year, according to a person familiar with the matter. Goldman Sachs Group Inc. advised Hermes Microvision, while ASML was working with Credit Suisse Group AG, two people said, asking not to be identified as the information is private.

A representative for ASML declined to comment beyond the company’s statement, while a spokesman for Hermes Microvision didn’t answer three calls to his office seeking comment. A spokeswoman for Credit Suisse didn’t answer calls seeking comment, while a representative for Goldman Sachs declined to comment.

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