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Applied Materials to Buy 2 Israeli Semiconductor Firms

Technology: The move is seen as a way for the company to stay on top of the market in a downturn.

November 26, 1996|From Bloomberg Business News

Applied Materials Inc., in an effort to broaden its product line, on Monday agreed to pay $285 million for two Israeli companies that make semiconductor inspection and measurement systems.

The world's largest producer of semiconductor equipment said it expects to take a charge of 27 cents to 32 cents a share against fiscal first-quarter earnings related to the purchase of Opal Inc. and Orbot Instruments Inc.

The demand for computer chips and chip-making equipment weakened in the last year, and the acquisitions are designed to help Santa Clara, Calif.-based Applied Materials keep on top of new technology and break into new markets, analysts said.

"Greater and greater consolidation is what you would expect in a downturn--it separates the leaders from the laggards," said analyst Vadim Zlotnikov of Sanford Bernstein & Co. "This is consistent with [Applied Materials'] strategy to offer a single vendor solution."

The equipment that Opal and Orbot make complements Applied Materials' lines and can be sold to the same basic customer bases, said Dennis Hunter, managing director for corporate development.

Applied Materials said it will begin a tender offer of $18.50 a share, or $175 million, on Wednesday for Opal, a maker of electronic microscope systems that measure dimensions of integrated circuits. Opal's research and development facilities are in Nes Ziona, Israel, and its marketing department is in Santa Clara.

The company said it will pay $110 million cash for closely held Orbot Instruments, a Yavne, Israel-based maker of optical systems that inspect patterned silicon wafers.

Shares in Applied Materials fell $1 to close at $37.625, and Opal shares jumped $6 to $18.125. Both trade on Nasdaq.

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