KLA Instruments, Tencor to Merge

KLA Instruments Corp. and Tencor Instruments said they will merge in a stock deal that would create a semiconductor capital equipment powerhouse with combined annual revenue exceeding $1 billion. Analysts said the deal would create a powerhouse in the critical market for semiconductor capital equipment that can be used to closely monitor production and improve yields. This capability has become ever more important as the cost of computer chip-making plants soars into the billions of dollars. The new company, KLA-Tencor, would be able to provide essentially one-stop shopping for chip process and diagnostics equipment. KLA plans to issue one common share for each of Tencor Instruments’ 31 million shares outstanding. The deal values Tencor at $40.875, KLA’s share price when trading was halted on Nasdaq. Tencor stock last traded at $30.50. Shareholder approval and regulatory clearance is pending. KLA Instruments is based in San Jose. Tencor Instruments of Mountain View makes wafer-defect inspection systems.