To get over the first regulatory hurdle in the Lam Research-KLA-Tencor merger, Lam Research will need to file under the Hart-Scott-Rodino Antitrust Improvements Act (HSR). While the companies describe their offering as “complementary,” the mid-2016 timing guidance indicates they believe there is at least a decent chance of an extended antitrust review. The merger agreement mentions the HSR requirement and “other governmental approvals.” The deal will almost certainly have to pass the muster of the European Union antitrust regulators, the German Foreign Cartel Office, and probably China, as well.
Arbitrageurs typically first check the respective companies’ Form 10-K filings to see if they are named competitors. Neither company mentions the other when discussing competition in its 10-K filings. In the press release, the companies mention they will serve approximately 42% of the wafer fabrication equipment market immediately upon closing. While it is unclear if that means their market share will increase to 42%, that sort of number would definitely trigger a second request from the U.S. Department of Justice and an in-depth review in the European Union.
Rick Wallace, president and chief executive officer of KLA-Tencor, addressed the antitrust review in the press release: “Given their complementary product lines and the significant industry benefits the transaction will enable, the companies believe that they will be able to obtain the requisite regulatory approvals on a timely basis.”
View more information: https://marketrealist.com/2015/10/regulatory-path-lam-research-kla-tencor-merger/