Fenwick & West antitrust practice co-chair Mark Ostrau talked with Law360 about the proposed merger between Applied Materials Inc. and Tokyo Electron Ltd., stating that the $29 billion deal would almost certainly get a "close look" from competition regulators in both in the United States and Japan.
The two companies compete on a variety of products, including semiconductor manufacturing equipment.
"This is a pretty concentrated space," Ostrau told Law360. "The parties have clearly recognized the probability of having to divest a number of overlapping product lines, so the key issue in avoiding a challenge will be whether the divestitures they are willing to make — and the willing buyers for such product lines — ameliorate the U.S. and non-U.S. reviewing agencies’ concerns."
The merger terms announced by the companies indicated they were willing to divest up to $600 million worth of assets, if needed, to secure regulatory approval.
According to Ostrau, the key task facing Tokyo Electron and Applied Materials is to convince regulators that only a small group of their products overlap.
"In such multiproduct situations, there’s often general consensus on the problem products and the safe products, but then there’s a gray area of products in the middle that the companies either have to convince the agencies are not a source of concern or have to dig deeper into the deal value and provide a fix to address [those] as well," Ostrau said.
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