KLA-Tencor Buys Electronics Parts Manufacturer Orbotech for $3.4 Billion

Nasdaq-listed KLA-Tencor Corporation has agreed to acquire Nasdaq-listed Orbotech Ltd. according to a company value of $3.4 billion, the companies announced on Monday.

For daily updates, subscribe to our newsletter by clicking here.

As part of the agreement, KLA-Tencor will pay approximately $69.02 per Orbotech share, out of which $38.86 per share will be paid in cash and the rest by exchange of KLA-Tencor shares. KLA-Tencor also announced a $2 billion share repurchase authorization, to be completed within 12 to 18 months following the close of this transaction.

Orbotech CEO Asher Levy. Photo: Amit Shaal

The deal has been approved by the board of directors of each company and is expected to close before the end of the calendar year 2018, subject to approval by regulators and Orbotech's shareholders.

Founded in 1997 and headquartered in Milpitas, California, KLA-Tencor is a provider of process control and yield management solutions, serving the semiconductor and other related nanoelectronics industries. The company employs approximately 6,000 people.

Founded in 1981, Orbotech develops and markets equipment for manufacturers of electronic components such as printed circuit boards, flat panel displays, advanced packaging, and micro-electro-mechanical systems. The company is headquartered in Yavne, in central Israel, and operates additional offices in North America, Europe, Japan, and Asia-Pacific. Orbotech employs some 2,600 people.

Rick Wallace, president and CEO of KLA-Tencor said in a statement that the deal will “open new market opportunities for KLA-Tencor. "KLA-Tencor has had a strong presence in Israel over the years, and this combination further expands our operations in this important global technology region."

“Together with KLA-Tencor, we will significantly increase growth potential, accelerate our product development roadmap, and enhance customer offerings." Asher Levy, CEO of Orbotech, said in a statement. "Orbotech will continue to operate under the Orbotech brand as a standalone business of KLA-Tencor based in Yavne, Israel," Mr. Levy added.

The deal reflects a rise of 17% of Orbotech’s stock value, which was priced at $59.02 per share by market close on Sunday. The company’s market capitalization is valued at $2.9 billion.

Orbotech’s stock went up by 87% in the past 12 months, and by 19.5% since the beginning of 2018. The company reported $900 million in annual revenues in 2017, an 11.7% growth compared with the year before. The company’s net profits for the year were $132 million, a 66% growth from the previous year.