NEW YORK – American chip-making equipment supplier Applied Materials said Monday it is poised to pay $ 3.5 billion – up 59% from a previous offer – to take over Japanese counterpart Kokusai Electric from smaller private equity firm KKR, announcing a favorable outlook for it and higher valuations in the sector.
The California-based manufacturer raised its claim for the former Hitachi unit from the original $ 2.2 billion in filing with the U.S. Securities and Exchange Commission. The deadline for the contract will be extended to March 19, 2021, from December 30, 2020, as one more regulatory hurdle remains to be cleared – in China.
“As of the date of this secession, all regulatory agreements have been approved … by the State Administration for Market Regulation of the People ‘s Republic of China, and Applied believes that progress is being made to attack to obtain such permission, “the company said in the file.
The deal, first announced by Nikkei in 2019, was hit against a glut in the semiconductor market that year.
China’s node has remained the last hurdle in Applied’s purchase for about a year, after receiving the green light from Japan and South Korea in the first quarter of 2020, following such approval from Ireland and Israel.
Dan Durn, Applied’s chief financial officer, said in an employment call in February 2020 that “we intend to close the Kokusai business in the middle of this year.”
Sino-American technology tensions have worsened since then, with Washington listing and imposing other sanctions on some of China’s largest companies – including chipmaking champion Semiconductor Manufacturing International Corp.
The construction of Kokusai would allow Applied to deploy Kokusai thin film technology as chipmaking segment races to take advantage of new applications incorporating 5G networks and artificial intelligence.