Sumitomo Heavy Industries and Axcelis Technologies, who have a Tokyo-based joint-venture SEN, said that they are ready to engage in discussions regarding the Japanese conglomerate's hostile takeover bid, subject to certain conditions.
Sumitomo said it remains committed to pursuing its takeover bid and that recent deteriorating performance at the companies' joint venture underscored the need for the deal. Axcelis had earlier reported that it expected to post a much wider first-quarter loss on lower income from SEN.
Axcelis has already rejected two bids from Sumitomo, saying the offer undervalues the company because it doesn't take into account market share gains from new products. The first offer, made earlier this year, was worth $532 million, which Sumitomo increased by 15 per cent to $615.6 million in March, or $6 per share.
Although the Axcelis management has been disdainful of the offer, some of its shareholders do not concur. They filed a class-action lawsuit in US District Court against the company in February alleging that it did not act in the best interest of shareholders when it rejected the initial offer.
Regulatory filings show that Axcelis has strong takeover defenses, including a shareholder rights plan, which would make a hostile deal costly and difficult. It also has staggered elections for its directors, making it impossible to replace the entire board all at once. Axcelis has even proposed buying out Sumitomo's stake in SEN, something that has been vigorously opposed by the Japanese conglomerate.
Sumitomo said its private equity partner TPG is still committed to acquiring Axcelis, and it is confident that Axcelis' stockholders prefer the ''certainty and immediate value of our all-cash premium offer to the status quo of Axcelis' long-term underperformance and this Board's intransigence.''
Axcelis has placed certain conditions before negotiations can proceed. Sumitomo said the conditions, which include stopping public statements and discussions with shareholders about the talks, would make it difficult to pursue good-faith negotiations. Axcelis has also asked Sumitomo to relinquish its rights to pursue a hostile bid and to seek seats on the Axcelis board.
The current fiasco is the culmination of a troubled relationship between the two companies over SEN. The joint venture was set up by Sumitomo and US industrial conglomerate Eaton in 1983 to make semiconductor fabrication equipment. When Eaton spun off Axcelis in 2000, it placed its 50 per cent interest in SEN with the new company.
SEN recently rolled out a single-wafer implementation tool that is similar to Axcelis equipment. Axcelis makes ion implantation equipment used in manufacturing semiconductors. Sumitomo and Axcelis have gone to arbitration in Japan over royalties.