Axcelis says Sumitomo's public overture damaging

By Lisa Kerner

Charlotte, N.C., Sept. 15 - Axcelis Technologies, Inc. said Sumitomo Heavy Industries Ltd.'s public approach to Axcelis shareholders has had a negative impact on the company's relationships with investors, customers and employees.

In a Sept. 15 letter to Sumitomo, Axcelis asked that any such future discussions be held in private. The letter was included in a form 8-K filed with the Securities and Exchange Commission.

Axcelis and Sumitomo "must continue to work together to optimize the performance" of their Japanese joint venture, SEN, Axcelis said.

After meeting with Axcelis in early September, Sumitomo concluded it would not be making an acquisition offer for Axcelis "at this time," the filing said.

Sumitomo had committed to submitting a revised proposal to Axcelis by Aug. 1 but did not, asking instead for seven more weeks of due diligence, which Axcelis denied.

Axcelis had also given Sumitomo until the end of August to make a new proposal and made an alternative proposal to Sumitomo that SEN and Axcelis could become one company, which would be accomplished by Sumitomo exchanging its SEN shares for Axcelis shares, the letter said.

According to Axcelis, it is evaluating several refinancing plans in light of its convertible debt due in January. Discussions with Sumitomo may have continued had Sumitomo allowed SEN to make a loan to Axcelis from its cash balance of $120 million, according to Axcelis. Sumitomo's last proposal only offered a small loan with conditions.

The companies entered into a confidentiality agreement in April.

In March, Axcelis' board unanimously rejected a revised and unsolicited proposal by Sumitomo and its private equity partner, TPG Capital, to acquire the company for $6.00 per share.

Axcelis unanimously rejected an unsolicited proposal by Sumitomo, a Tokyo integrated manufacturer, and TPG to acquire the company for $5.20 per share in February 2008.

Based in Beverly, Mass., Axcelis makes semiconductor manufacturing equipment.

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