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May 4, 2011 3:56 PM

Simpson Thacher, Dewey on Applied Materials's Varian Acquisition

Posted by Tom Huddleston Jr.

Applied Materials, Inc., one of the world's top chip equipment manufacturers, is looking to solidify its place in that market by agreeing to acquire Gloucester, Mass.-based Varian Semiconductor Equipment Associates Inc. for $4.9 billion.

The deal, announced on Wednesday, would allow Santa Clara, Calif.-based Applied Materials to expand its production of higher-performance chips for products like smartphones and solar panels, which are seeing increased demand, according to Reuters. According to the company's announcement, Varian is the leading producer of ion implantation equipment, which is used in the chip-making process.

Dewey & LeBoeuf is advising Applied Materials on the transaction, with a team led by Silicon Valley M&A partner Keith Flaum. Also on the deal: M&A partner James Griffin; tax partners Gordon Warnke and Joseph Pari; real estate counsel Joshua Berengarten; environmental counsel John Renneisin; export compliance partner Harry Clark; bank finance partner Greg Owens; corporate finance partners Chris Peterson and Frank Adams; and employment partner Margaret Keane.

The firm has advised Applied Materials on past transactions, including in 2009, when the company paid $364 million for electrochemical plating company Semitool, Inc. Flaum is part of a small group of Dewey partners who joined the firm from Cooley in 2009 and have been advising on Applied Materials transactions for nearly 15 years, according to a firm spokesperson at Dewey. In 2006 Cooley handled the company's $464 million acquisition of Applied Films Corporation.

Varian turned to Simpson Thacher & Bartlett for counsel and a team that included corporate partners Gary Horowitz and Marni Lerner, along with tax partner Steven Todrys and compensation and benefits partner Alvin Brown.

Applied Materials general counsel Joseph Sweeney led that company's in-house legal department, while Varian general counsel David Hwang was the primary in-house lawyer on the other side.

Under the agreement, Applied Materials will pay $63 per Varian share in the all-cash deal--a 55 percent premium over Varian's Tuesday closing price. Both companies' boards approved the deal unanimously, and the addition of Varian to Applied Materials's silicon systems group is expected to be accretive to earnings on a non-GAAP basis in the first year. 

The agreement comes at a busy time for the top end of the chip market. A month ago, Texas Instruments acquired its rival National Semiconductor in a $6.5 billion deal. And the leading chipmaker, Intel, unveiled on Wednesday a 22-nanometer processor made with 3-D transistors that increases chip performance by 37 percent and saves power.

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