Merger of Equals Moving Forward
By Kevin Winston
Last week, Applied Materials and Tokyo Electron held a media roundtable in Japan to discuss the merger of equals announced on September 24, 2013. Executives from both companies provided updates on the rationale behind the merger, the status of the integration planning, the expected benefits to employees, customers and the industry, as well as answered questions from the audience.
Tetsuro Higashi, Chairman, President and CEO of Tokyo Electron, who will become Chairman of the new company, and Mike Splinter, Executive Chairman of Applied Materials, who will serve as Vice-Chairman, addressed the audience of more than 20 members of the Japanese media.
Higashi-san discussed the current state of the semiconductor industry being one of rapid change, with major technology inflections caused by the insatiable consumer demand for mobile devices with increased functionality and lower power consumption. In this environment, he explained, companies must be able to respond to changes quickly and provide better and faster solutions at lower prices than ever before.
“I believe we are at a turning point in the history of semiconductors,” said Higashi-san. “The accelerating global spread of mobile devices is causing dramatic changes in the speed of technological innovation and complexity, and in the responsiveness to cost within the value chain. By bringing together the cutting-edge technologies and innovative products of Applied Materials and Tokyo Electron, we can help propel the industry forward to address new technical challenges, while delivering better, faster and at lower cost to customers.”
Since announcing the merger, both companies have spent considerable time with customers and have received generally positive feedback. According to Higashi-san, “I think a large part of the broad acceptance by our customers is their understanding of the solutions this merger will be able to provide and the value it will bring to them.”
Mike Splinter echoed Higashi-san’s comments on the benefits of the merger to customers and the industry stating, “We know advantages like longer battery life and portability – both enabled by precision materials engineering – will help our customers win the battle for mobility. Our merger will focus incredible engineering expertise to address these major technology inflections and grow the industry.”
When speaking on the integration planning, Splinter explained the companies are taking a disciplined and comprehensive approach to integration, addressing both corporate and cultural nuance so employees and operations will come together seamlessly to deliver for customers. Some of the integration work already underway includes organized teams who are committed to taking the greatest care to integrate thoughtfully, creating a company that functions effectively from day one.
“The more we plan for integration, the more evident our similarities become, such as our passion for customers, materials engineering and the success of our new company,” said Splinter. “Our teams are looking at business processes, our operating rhythm, cultural training and communications so we may rapidly create new value for customers.”
Splinter said the companies will conduct cultural training for employees so they understand the nuance and differences in doing business and working alongside colleagues from another culture.
“Though we come from different cultures, we share many common values and are dedicated to the success of our customers and driving technical innovation for the industry,” said Splinter. “Both companies have a strong heritage of customer service and an enduring commitment to push the boundaries of technology and engineering.”
In closing the roundtable, Higashi-san and Splinter reiterated that the logic behind the merger remains clear and unchanged: to bring together deep engineering talent and innovative, leading technologies and products to create an expanded set of capabilities in precision materials engineering and patterning to solve customers’ high-value problems better, faster and at lower cost.
“With a foundation of people, technology and commitment, we look forward to creating a new global innovator to benefit our customers, employees, investors and the entire industry.” remarked Splinter.
More details about the integration will be available in mid-January, when an S-4 form will be filed with the U.S. Securities and Exchange Commission. The close of the merger is estimated for the second half of 2014.