The merger agreement between Rudolph Technologies ( RTEC) and August Technology ( AUGT) remains under water, but Rudolph CEO Paul McLaughlin wants investors to know the deal has climbed closer to the surface.

August and Rudolph agreed in June to merge in a cash and stock deal worth $10.50 an August share at the time. That followed an $11 million payoff by August to Nanometrics ( NANO) to scuttle their existing merger deal.

Rudolph shares, which traded at $13.77 when the merger with August was announced, have become more valuable since then, climbing back above $15 on Thursday. "This is not the original $10.50 offer," said McLaughlin. "It depends on where our stock is."

For McLaughlin, this represents the increasing value that August shareholders will get if a merger with Rudolph is completed. Based on the deal's exchange ratios, August shares are now worth between $11.14 and $11.25 each. However, they're still below where the shares actually trade, even considering a seven-week pullback to $12.08.

August has been at the center of a bidding war all year as Nanometrics, then Rudolph, and then KLA-Tencor ( KLAC) have all sought to buy the chip equipment company.

August shares have continued to trade above the Rudolph offer as investors have anticipated more bidding. The main impetus is KLA-Tencor, the world's seventh-largest chip equipment company, which has said it will pay $11.50 a share in cash for August. KLA-Tencor has been quiet of late, but executives have repeatedly said their interest is serious.

But Rudolph and August executives say KLA-Tencor has yet to make an official offer for August. Rudolph and August maintain that their agreement represents excellent long-term value, regardless of where August's stock currently trades.

"From a shareholder perspective, there are a lot of definite things to look forward to," McLaughlin said, citing what would be the combined company's increased scale and competitive position and the general outperformance of small-cap semiconductor equipment stocks vs. large-caps.

Rudolph and August are pushing ahead with their plans to merge. Registration statements were filed on Aug. 9, and related discussions with regulators are ongoing. "We still expect to close this in the fourth quarter," he said.

Shareholder votes would follow, but for now, McLaughlin's team and executives at August are meeting with customers and investors to build support for the deal.

He said customer response to the deal has been positive as a combined Rudolph and August would offer a formidable alternative to KLA-Tencor. "They want us to succeed because of the enlightened self-interest of the customer," he said.

Rudolph and August build products related to semiconductor inspection and metrology, which helps find defects in chips during the production process. The combined company is planning on gaining cost benefits and competitive leverage.

A combined August and Rudolph would become the fourth-largest inspection and metrology company, trailing KLA-Tencor, Hitachi ( HIT) and Applied Materials ( AMAT).

Ultimately, whether Rudolph succeeds buying August comes down to the shareholders. KLA-Tencor continues to stick to its position that as the highest bidder it doesn't need to raise its offer price. McLaughlin said KLA-Tencor's actions so far are nothing more than "posturing," but August and Rudolph have been no slouches, either, as far as spinning the merits of this deal.

Rudolph's stock movement has definitely helped its case, but there's no certainty there, either. Rudolph shares dipped to $14.50 as recently as two weeks ago, which brought August's implied value under $11.

With a merger vote fast approaching, investors will soon have their say as to the value that should be placed on August shares.

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