Boston, MA 05/20/2014 (wallstreetpr) – The $24 billion provider of semiconductor equipment and services Applied Materials, Inc. (NASDAQ:AMAT) intends to purchase Tokyo Electron. The company has convened a special stockholder meeting next month to discuss the planned acquisition that it expects to expand its footprint in Asia.
The company is ready to offer $9.3 billion to Tokyo Electron in a takeover bid. If the deal succeeds, it will be AMAT’s biggest takeover transaction in history. It has called stockholders to a special meeting on June 23, during which it hopes to get approval for its planned acquisition.
Shares of Tokyo Electron surged on the news that Applied Materials, Inc. (NASDAQ:AMAT) was plotting a takeover.
Improving market condition
The plan to acquire Tokyo Electron comes a time when Applied Materials noted that business was starting to improve across its various segments, and it expects the trend to continue into the long-term future. In addition to the strong demand for new semiconductor equipment that can meet the emerging needs, Applied Materials, Inc. (NASDAQ:AMAT) said prices have also stabilized while its margins are strong.
As such, the company expects to realize strong revenue and profit growth if only it can enhance its capacity, expand market share and initiate more aggressive cost-saving measures. Therefore, the planned acquisition of Tokyo Electron is considered a step in the right direction.
Encouraging 2Q financial results
Applied Materials, Inc. (NASDAQ:AMAT) reported 2Q2014 results that showed significant performance improvement from a year ago. It expects the future to deliver even better results as it implements its growth strategies.
The company saw its revenue up 19 percent while profit hit a new high in recent times. In the three months period to April 27, AMAT generated revenue of $2.35 billion, up from $1.97 billion in 2Q2013. The increase in revenue had its corresponding impact on the bottom-line as profit shot to $262 million or $0.21 per share, against a loss of $129 million or $0.11 per share.
Future outlook
Buoyed by a strong 2Q, Applied Materials, Inc. (NASDAQ:AMAT) forecast positively for the current quarter. The company expects earnings per share to come between $0.25 and $0.29. However, it expects revenue to remain flat or drop 5 percent sequentially.
According to CEO Gary Dickerson, Applied Materials, Inc. (NASDAQ:AMAT) benefited in 2Q from the rise in demand for new machines as chipmakers seek to deliver high-performance but low-power chips. The CEO expects the demand for such machines to remain strong in 2014 and beyond.
