The three-way takeover battle for August Technology (AUGT) has been quiet the past couple of weeks, and there's a good reason for it: Nothing's happened.

August said Wednesday in its annual report that it still has not held discussions or reached confidentiality terms with either

Rudolph Technologies

(RTEC) - Get Report



(KLAC) - Get Report

about their takeover offers and that it continues to plan for a merger with


(NANO) - Get Report


The revelation comes on the same day that August and Nanometrics were given the go-ahead by the federal government to proceed with their merger plans. While the government wasn't expected to hold up August and Nanometrics, the approval represents one more hurdle removed from the two companies proceeding with

a deal that is currently underwater and well beneath the takeover bids from Rudolph and KLA.

Additionally, the antitrust unit of the Justice Department is now moving forward with an investigation into the competitive aspects of Rudolph's and KLA's bids, according to an August statement. August said it had no further information regarding the scope or timing of the investigation.

August and Nanometrics first announced plans to merge in a stock swap on Jan. 21. The deal sets the current per-share takeout price for August at $7.90 -- 34% below where it trades today. Even at the deal's inception, August shareholders bailed out of the stock, causing the deal to fall immediately underwater. Still, both management teams maintained the deal was best for shareholders because of the long-term value it would create.

Rudolph subsequently offered $10.50 a share, consisting of $2.16 a share in cash and the rest in Rudolph stock.

Then KLA-Tencor

stepped in, saying it was prepared to spend $11.50 a share in cash for August. KLA also hinted that it might be willing to make an offer with its stock.

At the end of last week, analyst Cristina Osmena with Jeffries & Co. said KLA might be actively considering a stock bid. She held a conference call discussion with Cary Halsted, head of KLA's investor relations, on Friday. "We believe that an increased bid for August is not likely given that the company will be bidding against itself, but that a conversion of the bid from cash to stock may be under consideration," Osmena wrote in a research note.

But at the time, August

demurred, saying it wasn't for sale and that Nanometrics represented its future. August did say its board wanted to review both offers from Rudolph and KLA, but only on the condition that both firms agree to confidentiality agreements.

On Wednesday, August said it has had no discussions with either company.

"As of the date of this filing, we have not reached agreement on the form of confidentiality agreement and no discussions regarding KLA's offer have taken place," August said in its filing. The same language was used in reference to Rudolph's offer.

Both Nanometrics and August are expected to file an S-4 this week with the


that will state the case for the merger ahead of a vote by shareholders.

August shares have held steady for the past month around $12, while Nanometrics shares have also stabilized in the past two weeks around $12.50.

Little news has come out this month to give any indication what has been happening among the four players. KLA executives have presented at several investor conferences and have said little except that they remain confident they will prevail.

Rudolph's position in this mix has weakened since the start of March, as its stock price has tumbled 20% to its current $15.15 price. Its bid is now worth $9.67 a share. Rudolph shares had run higher, closing at $19 on March 2 for the first time in almost a year, briefly making its bid worth $11.57 a share, a slight premium to KLA's bid.

Earlier last week, analyst Theodore O'Neill with Wells Fargo Securities cut his rating on August to sell from buy because of management's continued insistence on merging with Nanometrics. "There are nothing but planned short-term negative events for this stock over the next week or two," he said. Wells makes a market in August shares and Jeffries makes a market in KLA shares.He expects August management to start meeting with investors to discuss the deal's merits after the S-4 gets filed.

"We believe that the story will be a tough sell and that, as the roadshow drags on, there is more risk of the shares going lower than higher. August is a thinly traded stock, and we do not think it is out of the question that some shareholders may sell stock in order to avoid taking a meeting that is increasingly being seen as an ill-fated roadshow."

In the meantime, shareholders are growing increasingly uneasy about the prospect of giving their stock away at a discount: Two lawsuits seeking class action status have been filed against August and its directors.