Applied Materials CEO Mike Splinter on $4.9 Billion Varian Acquisition

Strategic Insights -

Applied Materials' CEO Mike Splinter discussed the company's acquisition of Varian Semiconductor Equipment Associates for $4.9 billion, a 55 percent premium over Varian's closing price. The deal is expected to be 8 percent non-GAAP accretive and will allow Applied Materials to fill in its product line and grow the business faster. Splinter emphasized the importance of growth and profitability in the deal, with a target of $50 million to $60 million in synergies in the second year and beyond.

Key Takeaways:

  • The acquisition is a strategic move for Applied Materials to fill in its product line and grow the business faster.
  • The deal is expected to be 8 percent non-GAAP accretive, with a target of $50 million to $60 million in synergies in the second year and beyond.
  • Mike Splinter, CEO of Applied Materials, emphasized the importance of growth and profitability in the deal.
  • The acquisition is seen as a way for Applied Materials to capitalize on the "mobility revolution" and create new transistors that are more powerful and efficient.
  • Applied Materials has been acquisitive in the past, with 13 deals in the last five years, and may pursue more deals in the future.
  • The management team at Varian Semiconductor will stay in place, with the CEO and CFO remaining for six months and potentially beyond.

Statistics:

  • $4.9 billion: the price of the acquisition
  • 55 percent: the premium over Varian's closing price
  • 8 percent: the expected non-GAAP accretion
  • $50 million to $60 million: the target for synergies in the second year and beyond
  • 13: the number of deals Applied Materials has made in the past five years
  • $1.2 billion: the amount allocated for R&D projects in Applied Materials

Sources:

  • Carol Massar, Bloomberg News Anchor
  • Mike Splinter, CEO, Applied Materials
  • Matt Miller, Bloomberg News Anchor
  • Bloomberg Transcript, May 4, 2011
  • Bloomberg TV
  • Applied Materials website
  • Varian Semiconductor Equipment Associates website