Lam Research, KLA-Tenor Call Off Merger on Antitrust Concerns

Semiconductor-equipment makers Lam Research Corp. and KLA-Tencor Corp. have ended their plans to merge—nearly a year after announcing their $10.6 billion agreement—because of resistance from antitrust regulators.

The companies said Wednesday it was a mutual decision and that no termination fee would be paid by either party. KLA said in its statement that the companies moved to terminate the merger after the U.S. Department of Justice advised the companies "that it would not continue with a consent decree that the parties had been negotiating," according to the statement.

The two Silicon Valley companies rank among the biggest makers of equipment used in semiconductor manufacturing. Lam has focused on machines that deposit or etch away materials on the silicon wafers used to make computer chips. KLA-Tencor's machines, by contrast, are used to spot defects in chips once the wafers are processed.

While the two companies dominate different segments of the market for machines used to make chips, concerns were raised about one company controlling both categories of equipment.

Last year, Lam announced the deal to buy KLA for $10.6 billion in what was then the latest sign that consolidation pressures among chip makers have spread to their suppliers.

Earlier this year, the companies said they were concerned they wouldn't obtain the needed approvals from antitrust regulators in time to complete their merger plan by their target date of Oct. 20.

After a halt on the companies was lifted, shares of Lam slid 2.4% after hours to $93.90 while KLA sank 5% to $67.70 in the extended session.

Write to Ezequiel Minaya at [e-mail]

(END) Dow Jones Newswires

October 05, 2016 19:15 ET (23:15 GMT)

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