Merrill: Veeco acquisition of FEI will not trigger change of controls

By Ronda Fears

Nashville, Tenn., July 12 - Merrill Lynch & Co. convertible analysts Yaw Debrah and Tatyana Hube noted in a report Friday that Veeco Instruments' $1 billion acquisition of FEI Co. will not trigger change of control features in either company's convertibles due to the all-stock nature of the merger.

Under terms of the merger, each FEI common share will be exchanged for 1.355 shares of the Veeco common stock, a 38% premium to FEI's closing price of $22.06 as of July 11.

This merger transaction does not trigger the change in control put provisions for either the FEI 5.5% convertible bond due 2008 or the Veeco 4.125% convertible bond due 2008 due to the all-stock transaction.

The analysts also noted that the merger does not appear to result in any reclassification, conversion, exchange or cancellation of the Veeco common stock despite the fact that the current Veeco shareholders will no longer constitute the majority of the company after the merger.

Post-merger, the FEI bond will be convertible into Veeco common shares at an adjusted ratio of 27.3627.

The Veeco 4.125% convertible was quoted down 9.25 points to 78.5 bid, 79 asked with the stock closing down $4.44 to $18.05.

The FEI 5.5% convertible was quoted up 3 points to 87.875 bid, 88.5 asked with the stock closing up $1.95 to $24.01.

The merger is expected to close during the fourth quarter of 2002 and is subject to approval of each company's stockholders, certain regulatory approvals and other customary closing conditions.

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