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Filed by Orbotech Ltd.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Orbotech Ltd.
Commission File No.: 000-12790
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KLA-Tencor
Announces Agreement to Acquire Orbotech Ltd.
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Extends
KLA-Tencors
technology and market reach within the electronics value chain
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Expands
KLA-Tencors
addressable market by $2.5 billion in high-growth electronics end markets
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Immediately accretive to revenue growth,
non-GAAP
earnings and free cash flow per share with approximately $50 million
run-rate
synergies
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Announces $2 billion share repurchase authorization
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MILPITAS, Calif., and YAVNE, Israel, March 19,
2018
KLA-Tencor
Corporation
(NASDAQ: KLAC)
(KLA-Tencor)
and
Orbotech Ltd.
(Orbotech) today announced they had entered into a
definitive agreement pursuant to which
KLA-Tencor
will acquire Orbotech Ltd. (Orbotech) for $38.86 in cash and 0.25 of a share of
KLA-Tencor
common stock in
exchange for each ordinary share of Orbotech, implying a total consideration of approximately $69.02 per share. The transaction values Orbotech at an equity value of approximately $3.4 billion and an enterprise value of $3.2 billion. In
addition,
KLA-Tencor
announced a $2 billion share repurchase authorization. The share repurchase program is targeted to be completed within 12 to 18 months following the close of this transaction.
With this acquisition,
KLA-Tencor
will significantly diversify its revenue base and add $2.5 billion of
addressable market opportunity in the high-growth printed circuit board (PCB), flat panel display (FPD), packaging, and semiconductor manufacturing areas. The broader portfolio of leading products, services, and solutions, as
well as increased exposure to technology megatrends, will support
KLA-Tencors
long-term revenue and earnings growth targets.
This acquisition is consistent with our strategy to pursue sustained, profitable growth by expanding into adjacent markets
, commented Rick
Wallace, President and Chief Executive Officer of
KLA-Tencor.
This combination will open new market opportunities for
KLA-Tencor,
and expands our portfolio
serving the semiconductor industry.
Mr. Wallace
continued
, Our companies fit together exceptionally well in terms of people, processes, and technology. In addition,
KLA-Tencor
has had a strong presence in Israel over the years, and this combination further expands our operations in this important global technology region
.
This acquisition is a true testament to Orbotechs strong leadership and
success,
said Asher Levy, Chief Executive
Officer of Orbotech Ltd
. I firmly believe that this deal benefits our employees and creates additional value for our shareholders. Together with
KLA-Tencor,
we will significantly increase growth
potential, accelerate our product development roadmap, and enhance customer offerings
. Mr. Levy
added, Orbotech will continue to operate under the Orbotech brand as a
standalone business of
KLA-Tencor
based in Yavne, Israel.
Total cost synergies are expected to be approximately $50 million on
an annualized basis within 12 to 24 months following the closing of the transaction, and the transaction is expected to be immediately accretive to
KLA-Tencors
revenue growth model,
non-GAAP
earnings and free cash flow per share.
The transaction has been approved by the Board of Directors of each
company and is expected to close by the fourth quarter of calendar year 2018, subject to approval by Orbotechs shareholders, required regulatory approvals and the satisfaction of the other customary closing conditions. No approval by
KLA-Tencor stockholders is required. The transaction is not subject to any financing conditionality.
KLA-Tencor
intends to fund the cash portion of the
purchase price with cash from the combined companys balance sheet. In addition,
KLA-Tencor
intends to raise approximately $1 billion in new long-term debt financing to complete the share repurchase.
J.P. Morgan acted as exclusive financial advisor to
KLA-Tencor;
Wilson Sonsini Goodrich & Rosati acted
as
KLA-Tencors
U.S. legal counsel; and Meitar Liquornik Geva Lesham Tal acted as
KLA-Tencors
Israeli legal counsel.
Barclays acted as exclusive financial advisor to Orbotech, Cravath, Swaine & Moore LLP acted as Orbotechs U.S. legal counsel, Tulchinsky Stern
Marciano Cohen Levitski & Co. as Israeli legal counsel, Goldman Sachs acted as special advisor to Orbotechs transaction committee.
About
KLA-Tencor:
KLA-Tencor
Corporation, a leading provider of process control and yield management solutions, partners with customers around the world to develop
state-of-the-art
inspection and metrology technologies. These technologies serve the semiconductor and other related nanoelectronics
industries. With a portfolio of industry-standard products and a team of world-class engineers and scientists, the company has created superior solutions for its customers for more than 40 years. Headquartered in Milpitas,
Calif., KLA-Tencor has
dedicated customer operations and service centers around the world. information may be found at
www.kla-tencor.com
.
(KLAC-F)
About Orbotech: Orbotech is a leading global supplier of yield-enhancing and process-enabling solutions for
the manufacture of electronics products. Orbotech provides cutting-edge solutions for use in the manufacture of printed circuit boards (PCBs), flat panel displays (FPDs), and semiconductor devices (SDs), designed to enable the production of
innovative, next-generation electronic products and improve the cost effectiveness of existing and future electronics production processes.
Forward-Looking Statements
This press release contains
forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. These forward-looking statements involve risks and uncertainties that could significantly affect the expected results
and are based on certain key assumptions. Due to such uncertainties and risks, no assurances can be given that such expectations will prove to have been correct, and readers are cautioned not to place undue reliance on such forward-looking
statements, which speak only as of the date hereof. The forward-looking statements contained herein include, but are not limited to, the manner in which the parties plan to effect the transaction, including the share repurchase program; the ability
to raise additional capital necessary to complete the repurchase program within the time frame expected; the expected benefits, synergies and costs of the transaction; management plans relating to the transaction; the expected timing of the
completion of the transaction; the parties ability to complete the transaction considering the various closing conditions, including conditions related to regulatory and Orbotech shareholder approvals; the plans, strategies and objectives of
management for future operations; product development, product extensions, product integration, complementary product offerings and growth opportunities in certain business areas; the
potential future financial impact of the transaction; and any assumptions underlying any of the foregoing. Actual results may differ materially from those referred to in the forward-looking
statements due to a number of important factors, including but not limited to the possibility that expected benefits of the transaction may not materialize as expected; that the transaction may not be timely completed, if at all; that
KLA-Tencor
may not be able to successfully integrate the solutions and employees of the two companies or ensure the continued performance or growth of Orbotechs products or solutions.
In addition, other risks that
KLA-Tencor
faces include those detailed in
KLA-Tencors
filings with the Securities and Exchange Commission, including
KLA-Tencors
annual report on Form
10-K
for
the year ended June 30, 2017 and quarterly report on Form
10-Q
for the quarter ended December 31, 2017. Other risks that Orbotech faces include those detailed in Orbotechs filings with the
Securities and Exchange Commission, including Orbotechs annual report on Form
20-F
for the year ended December 31, 2017.
Additional Information and Where to Find It
This press
release is being made in respect of a proposed business combination involving
KLA-Tencor
and Orbotech. This press release does not constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities or a solicitation of any vote or approval nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. The proposed transaction will be submitted to the shareholders of Orbotech for their consideration.
KLA-Tencor
intends to file with the SEC a
Registration Statement on Form
S-4
that will include a preliminary prospectus with respect to
KLA-Tencors
common stock to be issued in the proposed transaction and
a proxy statement of Orbotech in connection with the merger of an indirect subsidiary of
KLA-Tencor
with and into Orbotech, with Orbotech surviving. The information in the preliminary proxy
statement/prospectus is not complete and may be changed.
KLA-Tencor
may not sell the common stock referenced in the proxy statement/prospectus until the Registration Statement on Form
S-4
becomes effective. The proxy statement/prospectus will be provided to the Orbotech shareholders.
KLA-Tencor
and Orbotech also plan to file other documents with the SEC
regarding the proposed transaction.
This press release is not a substitute for any prospectus, proxy statement or any other document that
KLA-Tencor
or Orbotech may file with the SEC in connection with the proposed transaction. Investors and security holders of
KLA-Tencor
and Orbotech are urged to read the proxy
statement/prospectus and any other relevant documents that will be filed with the SEC carefully and in their entirety when they become available because they will contain important information about the proposed transaction.
You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SECs website (www.sec.gov). In addition,
investors and security holders will be able to obtain free copies of the proxy statement/prospectus (when they become available) and other documents filed with the SEC by
KLA-Tencor
on
KLA-Tencors
Investor Relations page
(ir.kla-tencor.com)
or by writing to
KLA-Tencor
Corporation, Investor Relations, 1 Technology
Drive, Milpitas, CA 95035 (for documents filed with the SEC by
KLA-Tencor),
or by Orbotech on Orbotechs Investor Relations page (investors.Orbotech.com) or by writing to Orbotech Ltd., Investor
Relations, 7 Sanhedrin Boulevard, North Industrial Zone, Yavne 8110101 Israel (for documents filed with the SEC by Orbotech).
Conference Call and Webcast Details
KLA-Tencor
will hold a conference call Monday, March 19 at 6:00 a.m. PT (9:00 a.m. ET) to discuss this
announcement. The conference call can be joined by dialing
1-866-787-1003,
Conference ID 5679896, within the U.S. and
1-678-276-8164,
Conference ID 5679896, for all other locations. To access the webcast, visit the Investor Relations section of
KLA-Tencor
web site at
http://www.kla-tencor.com
and click on the Events section to view the details. A webcast replay will be available on
KLA-Tencor
web site approximately three hours after the conference call concludes.
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