Robbins Arroyo LLP: Acquisition of KLA-Tencor Corporation (KLAC) by Lam Research Corporation (LRCX) May Not Be in Shareholders’ Best Interests
October 21, 2015 (San Diego, CA & Milpitas, CA) – Robbins Arroyo LLP is investigating the proposed acquisition of KLA-Tencor Corporation (NASDAQ: KLAC) by Lam Research Corporation (NASDAQ: LRCX). On October 21, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Lam Research will acquire KLA-Tencor. Under the terms of the agreement, KLA-Tencor shareholders will receive $32.00 in cash and 0.5 of a share of Lam Research for each share of KLA-Tencor they own, the value of which is equivalent to $67.02 per share of KLA-Tencor.
Is the Proposed Acquisition Best for KLA-Tencor and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at KLA-Tencor is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $67.02 merger consideration represents a premium of only 24.4% based on KLA-Tencor’s closing price on October 20, 2015. This premium is significantly below the average one-day premium of nearly 35% for comparable transactions within the past five years. In the last three years, KLA-Tencor traded as high as $84.21 on November 25, 2014, and most recently traded above the merger consideration – at $67.50 – on January 23, 2015.
On October 21, 2015, KLA-Tencor reported strong earnings results for its first quarter 2016. Net income for the quarter was $105 million, an increase of 46% compared to the first quarter of 2015. Additionally, KLA-Tencor has beat consensus analyst estimates for adjusted EPS, adjusted net income, and sales in each of the past five quarters. In commenting on these results, KLA-Tencor President and Chief Executive Officer Rick Wallace remarked, “KLA-Tencor posted solid results for the first quarter of fiscal year 2016, with new orders and earnings per share finishing above the range of guidance, and with revenue finishing at the top end of the range of guidance, demonstrating our market leadership, the resilience of our business model, and effective operational execution. The strong demand we are experiencing affirms KLA-Tencor’s ongoing focus on providing superior value to customers both in terms of meeting market requirements and delivering superior competitive offerings.”
In light of these facts, Robbins Arroyo LLP is examining KLA-Tencor’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
KLA-Tencor shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
KLA-Tencor shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, Robbins Arroyo LLP: Acquisition of KLA-Tencor Corporation (KLAC) by Lam Research Corporation (LRCX) May Not Be in Shareholders’ Best Interests.