TOKYO -- Applied Materials (IW 500/119) and Tokyo Electron, makers of tools to produce semiconductors and displays, said Tuesday they will merge to increase efficiency and to better meet changing customer demands.
The merger, which will create a new firm worth $29 billion, "brings together complementary leading technologies and products" to meet changing needs of customers, their joint statement said.
The two firms expect to enjoy synergies worth $250 million by the end of the first year of the merger, and $500 million by the end of the third year, the statement said.
The companies expect the transaction, pending regulatory approvals, to close in 2014, it added.
Tetsuro Higashi, president of Tokyo Electron, will become the chair of the new firm, whose name has yet to be announced.
Gary Dickerson, president and CEO of Applied Materials, will be the chief executive officer of the new entity.
The merger comes amid increasing competition between makers of mobile gadgets, such as smart phones and tablet computers.
"Materials innovation is the most significant lever for customers to drive cost-effective performance gains in mobile chips and displays," the companies said.
Under the deal, Tokyo Electron shareholders will receive 3.25 shares of the new company for every Tokyo Electron share held. Applied Materials shareholders will receive one share of the new company for every share they held.
Applied Materials shareholders will own approximately 68% of the new company, while the rest of 32% will go toward Tokyo Electron shareholders, the statement said.
The new firm's headquarters will be located both in Santa Clara, California and Tokyo, their statement said, adding that the company will be incorporated in the Netherlands. It will be listed both on the New York and Tokyo stock exchanges.
"We are creating a global innovator in precision materials engineering and patterning that provides our new company with significant opportunities to solve our customers' high-value problems better, faster and at lower cost," Dickerson said in the statement.
"We believe the combination will accelerate our momentum for profitable growth, increase the value we deliver to shareholders, and create great opportunities for our employees," he said.
Copyright Agence France-Presse, 2013