Orbotech Reaches Agreement to Acquire Photon Dynamics

  
    
  
  
    
      Orbotech Ltd. (NASDAQ/GSM SYMBOL: ORBK) and Photon Dynamics, Inc. 
      (NASDAQ: PHTN) today announced that they have signed a definitive 
      agreement for Orbotech to acquire Photon Dynamics, a leading provider of 
      test and repair systems for the liquid crystal (LCD) flat panel display 
      industry.
    
    
      Under the terms of the agreement, Orbotech will pay $15.60 per share in 
      cash for all of the issued and outstanding shares of Photon Dynamics’ 
      common stock, making an aggregate merger consideration value for the 
      transaction of approximately $290 million. The acquisition will be 
      financed through a combination of internally-generated funds and 
      external-source financing.
    
    
      This acquisition, which is the largest by Orbotech to date, is a major 
      part of Orbotech’s strategy for growth and 
      diversification in its flat panel display business.
    
    
      “The synergies resulting from the integration 
      of our two companies’ highly complementary 
      skill sets, technologies and infrastructures will open the door to 
      significant enhancements in FPD yield management and process control, 
      and will create potential for other production capabilities in the 
      future,” said Mr. Rani Cohen, Chief Executive 
      Officer of Orbotech. “It will allow us to 
      capitalize more comprehensively on current and emerging opportunities in 
      the flat panel display industry, while building upon and further 
      expanding our current range of solutions, all of which will bring added 
      value to our customers and will benefit our employees and shareholders.”
    
    
      Mr. Cohen added: “Photon Dynamics has very 
      talented employees with first-class expertise, and leading products that 
      are widely recognized throughout the FPD industry. We believe that these 
      assets, in addition to Photon Dynamics’ strong 
      technical capabilities and its excellent customer relations, will 
      benefit FPD customers and positively impact Orbotech’s 
      long-term success.”
    
    
      Jeffrey A. Hawthorne, President and Chief Executive Officer of Photon 
      Dynamics, stated: “We see this new venture as 
      a very exciting opportunity to provide FPD customers with a 
      one-stop-shop that offers a complete line of yield management solutions. 
      By teaming up with Orbotech, which is committed to investing in 
      innovative technologies, we will be able to grow the combined business 
      and improve its competitive positioning as we face a maturing industry.”
    
    
      The Boards of Directors of both companies have approved the acquisition. 
      The transaction is subject to customary conditions to closing, including 
      approval by Photon Dynamics’ stockholders and 
      requisite regulatory approvals, and is expected to close during the 
      second half of 2008.
    
    
      Orbotech’s financial advisor on the 
      transaction is Lehman Brothers Inc. and Photon Dynamics’ 
      financial advisor on the transaction is Credit Suisse Securities (USA) 
      LLC.
    
    
      An Orbotech investor conference call regarding this acquisition is 
      scheduled for Thursday, June 26, 2008, at 3:00 p.m. EDT. The dial-in 
      number for the conference call is 210-234-0021, and a replay will be 
      available after 8:00 p.m. EDT on June 27, 2008 and until 11:59 p.m. EDT 
      on July 11, 2008, on a telephone number which will be published on the 
      investor relations section of Orbotech’s 
      website. The pass code is ORBOTECH. A live web cast of the conference 
      call and replay can also be heard by accessing the investor relations 
      section on Orbotech’s website at www.orbotech.com.
    
    
      About Photon Dynamics, Inc.
    
    
      Photon Dynamics, Inc. (NASDAQ: PHTN) is a global supplier utilizing 
      advanced machine vision technology for market leading LCD flat panel 
      display test and repair systems and for high performance digital imaging 
      systems for defense, surveillance, industrial inspection and medical 
      imaging applications. For more information about Photon Dynamics, visit 
      its website at www.photondynamics.com.
    
    
      About Orbotech Ltd.
    
    
      Orbotech is principally engaged in the design, development, manufacture, 
      marketing and service of yield-enhancing and production solutions for 
      specialized applications in the supply chain of the electronics 
      industry. Orbotech’s products include 
      automated optical inspection (“AOI”) 
      and process control systems for bare and assembled printed circuit 
      boards (“PCB”s) 
      and for flat panel displays (“FPD”s), 
      and imaging solutions for PCB production. Orbotech also markets 
      computer-aided manufacturing and engineering (“CAM”) 
      solutions for PCB production. In addition, through its subsidiary, 
      Orbograph Ltd., Orbotech develops and markets automatic check reading 
      solutions to banks and other financial institutions, and has developed a 
      proprietary technology for web-based, location-independent data entry 
      for check processing and forms processing; and, through its 
      subsidiaries, Orbotech Medical Denmark A/S and Orbotech Medical 
      Solutions Ltd., is engaged in the research and development, manufacture 
      and sale of specialized products for application in medical nuclear 
      imaging. Of Orbotech’s employees, more than 
      one quarter are scientists and engineers, who integrate their 
      multi-disciplinary knowledge, talents and skills to develop and provide 
      sophisticated solutions and technologies designed to meet customers’ 
      long-term needs. Orbotech maintains its headquarters and its primary 
      research, development and manufacturing facilities in Israel, and more 
      than 30 offices worldwide. Orbotech’s 
      extensive network of marketing, sales and customer support teams 
      throughout North America, Europe, the Pacific Rim, China and Japan 
      deliver its knowledge and expertise directly to customers the world 
      over. For more information visit www.orbotech.com.
    
    
      Except for historical information, the matters discussed in this 
      communication are forward-looking statements that are subject to certain 
      risks and uncertainties which could cause the actual results to differ 
      materially from those projected, including statements regarding the 
      proposed business combination and the anticipated consequences and 
      benefits of such transaction, industry trends, the timing and strength 
      of product and service offerings, changes in business or pricing 
      strategies, changes in the prevailing political and regulatory framework 
      in which the relevant parties operate or in economic or technological 
      trends or conditions, including currency fluctuations, inflation and 
      consumer confidence, on a global, regional or national basis and other 
      risks detailed from time to time in Orbotech and Photon Dynamics’ 
      SEC reports. The Companies assume no obligation to update any 
      information in this communication.
    
    
      PHOTON DYNAMICS INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE 
      PROXY STATEMENT REGARDING THE BUSINESS COMBINATION TRANSACTION REFERRED 
      TO ABOVE, WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT 
      INFORMATION.
    
    
      The proxy statement will be filed with the Securities and Exchange 
      Commission by Photon Dynamics, Inc. Investors and security holders of 
      Photon Dynamics may obtain a copy of the proxy statement (once 
      available) free of charge, as well as other documents filed by Photon 
      Dynamics with the SEC, at the SEC’s website 
      at www.sec.gov. The proxy statement 
      (when available) and these other documents may also be obtained from 
      Photon Dynamics free of charge by direct request to Photon Dynamics’ 
      investor services department.
    
    
      CERTAIN INFORMATION CONCERNING PARTICIPANTS
    
    
      Photon Dynamics, Inc. and its directors and executive officers and other 
      members of management and employees may be deemed to participate in the 
      solicitation of proxies in respect of the proposed business combination. 
      Investors of Photon Dynamics may obtain a detailed list of names, 
      affiliations and interests of Photon Dynamics participants from an SEC 
      filing under Schedule 14A to be made by Photon Dynamics.