Axcelis, Veeco to Merge in $4.4B Deal to Form Chip Equipment Leader
All-stock 'merger of equals' aims to create a diversified powerhouse in the high-growth semiconductor market, though markets react differently.
Axcelis Technologies (ACLS) and Veeco Instruments (VECO) are set to combine in a major industry shake-up, announcing a valued at approximately $4.4 billion. The all-stock transaction aims to forge a new, diversified leader in the semiconductor capital equipment market, though shares of the two companies saw sharply different reactions in initial trading.
Under the terms of the deal, Veeco shareholders will receive 0.3575 shares of Axcelis common stock for each Veeco share they hold. Upon completion, existing Axcelis shareholders will own approximately 58% of the combined entity, with Veeco shareholders holding the remaining 42%. The new company, which will be rebranded, will be led by Axcelis' current CEO, Dr. Russell Low. The merger's strategic rationale is to create the fourth-largest U.S. wafer fabrication equipment supplier, expanding the company's addressable market to over $5 billion with increased exposure to high-growth sectors like artificial intelligence and power devices.
The market's reaction underscored the immediate financial implications for each side. Veeco's stock surged over 7% on the news, reflecting the premium embedded in the deal terms for its shareholders. Conversely, Axcelis shares fell more than 10% as its investors weighed the effects of stock dilution and integration risks. This divergence is common in all-stock transactions, where the acquirer's stock often sees a short-term dip.
Management from both companies projects significant financial benefits, targeting $35 million in annual run-rate cost synergies within 24 months of closing. On a pro-forma basis, the combined company generated roughly $1.7 billion in revenue in fiscal 2024. to build a more resilient and competitive player in the chip equipment space, despite the initial negative reaction from Axcelis shareholders.
The transaction, which has been unanimously approved by both boards of directors, is , pending customary regulatory reviews and approvals from both companies' shareholders. The deal is anticipated to become accretive to non-GAAP earnings per share within the first year after completion.