Lam Research (LRCX), KLA-Tencor (KLAC) Update on Merger; Sees Extension to Obtain Regulatory Clearances

August 10, 2016 8:48 AM EDT

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Lam Research Corporation and KLA-Tencor Corporation provided an update on their planned business combination. As previously disclosed, the parties continue to discuss their proposed merger, including potential remedies, with the staff of the Department of Justice (the "DOJ"), and with competition authorities in Korea, Japan and China. The companies continue to believe the transaction is pro-competitive and beneficial to their respective customers, employees and suppliers.

Lam and KLA-Tencor are working diligently to receive the necessary regulatory approvals. However, it has become more likely that obtaining regulatory clearances in one or more of the remaining jurisdictions may extend beyond October 20, 2016, the outside date set forth in the merger agreement.

The companies will announce when clearances are obtained, but they do not plan to comment on specific discussions with regulatory agencies, or comment at this time on action Lam or KLA-Tencor will take if the outside date is reached without obtaining all necessary approvals.

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Antitrust litigation may also hinder the KLA LAM merger
Anton T. on 2016-08-13 08:52:16
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Antitrust litigation may also hinder the KLA LAM merger. In an antitrust lawsuit, filed in December, 2014, KLAC is alleged to have misused the patent system for anticompetitive purposes.

DOJ second requests normally seek information about allegations that a company is not behaving in a competitive manner, including, but not limited to, customer and competitor complaints, threatened, pending, or completed lawsuits, and federal and state investigations. That request would include the pending antitrust lawsuit.

Adding to the potential problem, a patent application by KLAC to the United States Patent and Trademark Office (“USPTO”) has recently surfaced that indicates there may be additional antitrust issues lurking in KLAC’s patent portfolio.

Termination of the merger could have negative consequences for KLAC. Its competitors Nanometrics (NANO), Rudolph Technologies (RTEC), and Nova (NOVA) are already looking for opportunities the acquisition might create, and a termination could leave KLAC vulnerable.

The case is 1:14-cv-01113-SS in the U.S. District Court in the Western District of Texas (Austin).

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