Online information source for semiconductor professionals

A deal to buy the front-end operations of ASM International hit a small hurdle with ASM’s rejection of Applied Materials' second offer. However, there seems to be no outright show-stopper emerging at this point as ASM’s executives have their backs against the wall over previous lacklustre performance of the division for nearly a decade. 

The rejection was simply a faint to push up the price towards $1 billion but it’s a dangerous game as Applied can simply walk away and watch investors pummel management. Then, Applied can come back to the table when things are even worse and offer nothing more but get what they want, without any hassle.

I have had a few people from the investment community ask me whether someone else would be interested in ASM’s front-end operations, presumably because such rumoured interest could push the current stock price up - or the bidding!

Although there are a few companies that fit the bill, none strike me as real potential candidates right now. That may be part of the problem for ASM if it doesn’t do a deal with Applied, but it can’t claim now that others are interested as nothing has surfaced.

That may be another ploy by ASM before the final deal is struck with Applied. Any rumour of other bidders will be scrutinized very closely by the financial community.

I made a few inquiries late last week on that possibility but the shortlist I had assembled showed no current interest to get in on the bid. One source at one of those on my shortlist felt that the timing wasn’t right for them due to a series of acquisitions over the last few years and the need to get those working efficiently took priority.

Another said that there was too much overlap in some product areas making it more expensive for them than it would be for Applied.

Other sources still see a deal being done with Applied sooner rather than later and dont seem to be interested in bidding at all.