The outlook for Applied Materials Inc.'s (AMAT) $12 billion acquisition of Tokyo Electron Ltd. (8035) seems to still lean toward an eventual approval but the arbitrage spread remains wide.
That spread, about $1.80, or 10%, Monday trended in from about $2 on a report that the deal looks likely to clear its review in South Korea, even though the time line for that approval was said to be a spring date.
More importantly, the review of the deal with the Department of Justice in the U.S. has reached a stage of that agency vetting a buyer of assets to be divested to get the deal done, a source said.
The report out of South Korea by the Korea Times suggested that Samsung Electronics was opposing the transaction but has altered its stance after reaching an agreement with Applied Materials regarding collaboration on next generation chip designs. Korea is now likely to approve the transaction, but possibly not until March or April, according to that report.
The companies have been targeting a close by the end of 2014, but last month allowed that the regulatory reviews could slip into 2015.
The antitrust review by the Ministry of Commerce of the People's Republic of China under a standard timetable could end at the close of January, considering an accepted application in late July. The companies refiled for that review on July 28.
The U.S. Department of Justice issued a second request issued last Dec. 13.
One source said that the DOJ was reviewing a buyer of assets to be divested for the approval and that the DOJ required a "fix-it-first".