Jones Day, Weil Lead on $29 Billion Chip Sector Deal

, The Am Law Daily

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Jones Day and Weil, Gotshal & Manges are taking the lead on one of the largest-ever foreign takeovers of a Japanese company.

Santa Clara–based Applied Materials, the world's top supplier of chipmaking equipment used in electronics and flat panel displays, is acquiring Tokyo Electron in an all-stock deal that values the Japanese rival at $9.3 billion. The combined company would have a total market value of roughly $29 billion, the two companies said in their Tuesday announcement of the deal.

The deal, which the two companies refer to as "a merger of equals," calls for Tokyo Electron shareholders to exchange each of their shares in the Japanese company for 3.25 shares in the combined company. In turn, Applied Materials shareholders will receive one share of the new company for each of their shares, giving them a 68 percent stake in the yet-to-be-named combined entity and Tokyo Electron's investors the remaining 32 percent.

The deal is expected to close before the end of 2014, pending the approval of regulators and both companies' shareholders. At that point, the new company will be incorporated in The Netherlands while keeping dual headquarters in Santa Clara and Tokyo. Each of the legacy companies will designate five members for the new company's board, with an additional representative being mutually agreed upon. Applied Materials CEO Gary Dickerson will serve as CEO of the new company, while Tokyo Electron CEO Tetsuro Higashi will become chairman.

Combining with Tokyo Electron—the world's third-largest seller of chipmaking equipment—would allow Applied Materials to consolidate its global operations and discover savings at a time when demand for chip manufacturing equipment has slowed as a result of clients looking to cut their production costs, according to The Wall Street Journal. The companies said they expect savings of $250 million in the first year after the deal is completed and also plan to launch a $3 billion stock buyback within a year of closing.

For its role in the deal, Applied Materials has brought together a team of legal advisers led by Wei, which is working with attorneys from Japanese firm Mori Hamada & Matsumoto and Dutch firm De Brauw Blackstone Westbroek.

The Weil attorneys working on the matter include Silicon Valley-based M&A partners Keith Flaum and James Griffin, as well as M&A associates Gabriel Shapiro and Nicholas Doloresco. Antitrust partners Steven Newborn and John Scribner are also advising, as well as SEC disclosure partner P.J. Himmelfarb, technology and IP transactions partner John Brockland, and corporate governance partner Ellen Odoner. Other Weil associates on the deal are Adelaja Heyliger, Edric Itchon, Robert Meyer, and Jeff White. Thomas Larkins serves as general counsel for Applied Materials.

Weil partners Flaum and Griffin, both of whom joined the firm last year from the now-defunct Dewey & LeBoeuf, previously advised Applied Materials on its 2011 acquisition of Varian Semiconductor Equipment Associates—a $4.9 billion deal they handled while still with Dewey.

Meanwhile, Jones Day and Japanese firm Nishimura & Asahi are representing Tokyo Electron in connection with the all-stock deal. The Jones Day team is led by Dallas-based M&A partner R. Scott Cohen. The firm's global team also includes M&A partners Troy Lewis, Ferdinand Mason, and Marc Rijkaart van Cappellen; antitrust partners Joe Sims, Kathryn Fenton, Ryan Thomas, Carsten Gromotke, Yizhe Zhang, and antitrust of counsel Tom Smith; and tax partners Lester Droller, Lodewijk Berger, and Koichi Inoue. Capital markets partner James O'Bannon, benefits and compensation partner Manan "Mike" Shah, government regulation partner Noel Francisco, private equity partner David Longstaff, securities litigation partner Michael Davitt, and global disputes partner Peter Wang are also advising.

Last year, M&A partner Cohen led a Jones Day team advising Tokyo Electron on its $252.5 million purchase of FSI International. The firm also later successfully defended the company against breach of fiduciary duty claims brought by FSI's shareholders against Tokyo Electron and FSI as a result of that deal.

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