Applied Materials Eyes Up ASMI Businesses

Applied Materials has approached beleaguered Dutch semiconductor equipment maker ASM International to buy a significant part of its business for $400 million to $500 million.

Shares in ASMI jumped as much as 23 percent to an eight-month high on Friday, but closed 10.2 percent in the green, after the company said its U.S. rival had expressed interest in two of its businesses that make machines to deposit thin films of materials on silicon wafers.

ASMI, which is locked in a dispute with activist investors who are trying to sack its chief executive, said a divestment would have major implications for its strategy and its boards would study the offer and its implications.

The company will announce its initial position by June 14.

ASMI does not break down revenue for business lines, but its ALD and PECVD deposition operations represent a significant part of ASMI's unit that makes machines for front-end operations on semiconductors.

Other main business lines are vertical furnaces and epitaxy.

The activist investors' push is motivated by years of underperformance of the front-end business.

ASMI has promised to bring the unit's profit margins in line with peers by 2009.

British pension fund manager Hermes declined to comment on the news.

Fellow activist investor Fursa Alternative Strategies could not immediately be reached.

ASMI shares were up 17.8 percent at 19.90 euros.

ASMI's loss-making front-end business is focused on the $9.5 billion deposition segment of the semiconductor equipment market.

The company also holds 53 percent of ASM Pacific Technology, which is focused on machines for the back-end segment of semiconductor assembly and testing.

The jump in ASMI's share price added more than 150 million euros to the company's market capitalization, which at current share prices and exchange rates is now slightly above the around 1 billion euro value of its stake in ASM Pacific.