Zygo, Electro Scientific terminate merger agreement

By Lisa Kerner

Charlotte, N.C., April 3 - Zygo Corp. paid $5.4 million to Electro Scientific Industries, Inc. after the companies mutually terminated their Oct. 15 agreement and plan of reorganization, according to a form 8-K filed with the Securities and Exchange Commission.

The companies entered into a settlement agreement along with Zirkon Merger Sub, LLC on Thursday.

Zygo will pay Electro Scientific an additional $1.2 million if Zygo's board of directors accepts a proposal for a sale of the company within six months, the filing said.

As previously reported, Electro Scientific agreed to acquire Zygo in an all-stock transaction that would give 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.

The merger agreement had been approved unanimously by each company's board of directors.

In January, Zygo sought to increase the merger consideration by $4.00 cash per Zygo share and to increase the number of Electro Scientific board seats held by Zygo designees after closing to four from three.

Electro Scientific rejected the proposal, and Zygo's board withdrew its recommendation in favor of the merger.

Portland, Ore.-based Electro Scientific supplies photonic and laser systems to microelectronics customers.

Zygo supplies optical metrology instruments, precision optics and electro-optical design and manufacturing services. The company is located in Middlefield, Conn.

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