By Lisa Kerner
Charlotte, N.C., Oct. 16 - Electro Scientific Industries, Inc. and Zygo Corp. agreed to combine in an all-stock transaction designed to create growth opportunities for the new photonics microengineering and metrology systems company, it was announced on Thursday.
The transaction is expected to be completed in the first quarter of 2009, an ESI news release said.
Both companies' boards of directors unanimously approved an agreement that gives Zygo shareholders 1.0233 shares of Electro Scientific stock for each share of Zygo stock in a tax-free transaction valued at about $10.30 per share, based on yesterday's closing price of Electro Scientific stock.
Electro Scientific said it will issue about 18.1 million shares on a diluted basis to complete the transaction, giving Zygo shareholders 40% ownership of the combined company.
A $6.6 million termination fee is included in the agreement, it was reported in a form 8-K filed with the Securities and Exchange Commission.
Electro Scientific's board of directors also approved an increase to the existing share repurchase program to $100 million of outstanding Electro Scientific common stock, contingent on the merger's close.
There is no fixed completion date for the repurchase program, Electro Scientific said.
According to Electro Scientific, the company has repurchased about $4.7 million against the existing authorization.
"Based on estimated synergies of $5 million to $7 million from revenue projections and annual cost savings, the merger is anticipated to be accretive on a non-GAAP basis in the first full fiscal year of combined operations," Electro Scientific president and chief executive officer Nick Konidaris said.
Electro Scientific was advised by Needham and Co. Goldman Sachs advised Zygo.
Zygo supplies optical metrology instruments, precision optics and electro-optical design and manufacturing services worldwide. The company is located in Middlefield, Conn.
Portland, Ore.-based Electro Scientific supplies photonic and laser systems to microelectronics customers.
| Acquirer: | Electro Scientific Industries, Inc.
|
| Target: | Zygo Corp.
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| Announcement date: | Oct. 16
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| Price per share: | 1.0233 shares of ESI stock
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| Expected closing: | First quarter of 2009
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| Termination fee: | $6.6 million
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| Stock price for acquirer: | Nasdaq: ESIO: $10.54 on Oct. 15
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| Stock price for target: | Nasdaq: ZYGO: $10.07 on Oct. 15
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