Lam Research And KLA-Tencor Terminate Merger

(RTTNews) - Lam Research Corp. (LRCX) and KLA-Tencor Corp. (KLAC) abandoned their plans to merge after the U.S. Department of Justice informed the companies that it had serious concerns that the proposed transaction would harm competition.

The Justice Department said that the proposed merger of Lam Research and KLA-Tencor would have combined a leading supplier of semiconductor fabrication equipment with a leading supplier of metrology and inspection equipment. Metrology and inspection technologies are growing increasingly important to the successful development of semiconductor fabrication equipment and process technology. KLA-Tencor's leading position in several metrology and inspection markets could have created the potential for Lam Research to foreclose its competitors by reducing their timely access to key KLA-Tencor equipment and related services.

Separately, KLA-Tencor and Lam Research announced that they have agreed to terminate their proposed merger agreement. The parties decided to it was not in the best interests of their respective stakeholders to continue pursuing the merger after the U.S. Department of Justice advised KLA-Tencor and Lam Research that it would not continue with a consent decree that the parties had been negotiating. No termination fees will be payable by either the Company or Lam Research in connection with the termination of the Merger Agreement.

In addition, KLA-Tencor announced that its board of directors has authorized an increase of the level of the company's quarterly dividend from $0.52 to $0.54 per share. This increase is expected to take effect beginning with KLA-Tencor's quarterly dividend to be declared in November 2016. This represents a four percent increase compared to the prior quarterly dividend.

In October 2015, Lam Research had agreed to acquire KLA-Tencor for $5.0 billion in aggregate cash consideration and 80 million shares of Lam common stock, then valued at $5.6 billion.