RBC Asks 'What's the Holdup?' on Lam Research's (LRCX) Deal with KLA-Tencor (KLAC)

August 10, 2016 11:49 AM EDT
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Price: $112.35 +1.36%

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RBC Capital affirms Lam Research (Nasdaq: LRCX) at Outperform with a price target of $105 following news that its merger with KLA-Tencor (Nasdaq: KLAC) has been pushed out.

Analyst Amit Daryanani commented, Before market open, LRCX announced that it has become more likely that obtaining regulatory clearances for the LRCX/KLAC deal in one or more jurisdictions may extend beyond October 20, 2016 (the timeline LRCX had noted during their June EPS call). No specific date was set for the anticipated deal closure in the recent press release. The key regulatory bodies left to approve the deal include the DOJ, and competing authorities in Korea, Japan, and China.

While it is unclear from the release which of the regulatory bodies are specifically holding up the process, we think the DOJ second request and South Korea decision to further review the transaction are the largest hurdles for the transaction. Its notable that LRCX refrained from providing an updated timeline for deal close, something they have done consistently in the past.

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