Lam Research/Novellus Systems

On December 14, 2011, Lam Research Corp. (Nasdaq: LRCX) entered into a definitive merger agreement to acquire Novellus Systems, Inc. (Nasdaq: NVLS) in an all-stock transaction valued at approximately $3.3 billion.

The combined enterprise, which will retain the name of Lam Research Corp., will be a semiconductor equipment company with a broad portfolio of market-leading products and multiple opportunities to drive value creation through significant revenue and cost synergies. Total cost synergies are expected to be approximately $100 million on an annualized basis by the fourth quarter of 2013. In addition, Lam announced a $1.6 billion common stock repurchase program. This new program, which replaces Lam's existing share repurchase program, is targeted to be executed over the 12 months following the close of the transaction. Lam expects the transaction to be accretive to its non-GAAP earnings within one year after transaction close.

Under the terms of the agreement, Novellus stockholders will receive 1.125 shares of Lam Research common stock for each share of Novellus that they own, in a tax-free exchange. Based on the closing price of Lam's stock on December 14, 2011, the transaction values Novellus at a price of $44.42 per common share. Upon closing, Lam and Novellus stockholders will own approximately 59 percent and 41 percent, respectively, of the combined company.

The companies expect the transaction, which has been unanimously approved by both Lam's and Novellus's boards of directors, to close in Q212.

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