Veeco to Acquire FEI for $1 Billion in Stock - TheStreet

Veeco Instruments

(VECO) - Get Report

said on Friday that it will acquire



in a stock swap worth about $1 billion, creating the third-largest U.S. metrology company.

FEI shareholders will receive 1.355 Veeco shares for each FEI common share they own. Based on Thursday's close, the transaction values FEI shares at about $30.47, a 38% premium to their closing price of $22.06. FEI will become a wholly-owned subsidiary of Veeco, and the company will be renamed Veeco FEI.

The deal, which has been unanimously approved by the boards of directors of each company, is expected to be accretive to Veeco's earnings in 2003 on a pro forma basis. On a GAAP-basis, the merger will be dilutive to 2003 results, but it should offer operating synergies in the neighborhood of $8 million to $10 million a year through integration of sales staffs, management, and supply networks.

In a press release, the companies said, "The combination of Veeco and FEI creates a leading metrology and process equipment company, providing solutions for growth opportunities in semiconductor, data storage, telecom/wireless, and scientific research market." The combined company would have had 2001 net sales of $825 million.

Shares of FEI were recently trading up about 25% to $27.50 in premarket action, while Veeco was falling 8.6% to $20.56.