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Technology Stocks : Speedfam [SFAM] Lovers Unite ! -- Ignore unavailable to you. Want to Upgrade?

To: SemiBull who wrote (3233)	11/20/1998 9:23:00 AM
From: Kirk Winkler	Read Replies (1) \| Respond to of 3736

Semibull, Interesting deal, eh? I like it, being a shareholder of both companies, I think the combination should be good for both companies and shareholders. It should give them good mass (maybe not enough but certainly better than before) to be able to compete better with AMAT. I also like the fact that it's a stock deal, thereby not depleting either company's cash balance. Any opinions on the marriage from a competitive perspective? Still holding onto AGAI! Regards, Kirk

To: SemiBull who wrote (3233)	11/20/1998 11:02:00 AM
From: Rob-Chemist	Respond to of 3736

The other interesting company in this whole scenario is LRCX, who were also part of the NVLS-IPEC Cu alliance. On the one hand, LRCX has just introduced their rather novel polishing station, which will compete directly with SFAM-IPEC. On the other, LRCX and IPEC are very closely allied in terms of CMP cleaning (they have an integrated program), while SFAM recently introduced their own cleaning station a while back. In their most recent earnings report, SFAM reported that of the CMP stations they shipped last quarter, some fraction of them contained the SFAM cleaner, while the others likely contained the LRCX cleaner. My impression from the way they phrased the statement was that their cleaning station hadn't taken off as quickly as they had hoped. What are your thoughts on this half of the business? (Overall, I think that this was a very good merger.)

To: SemiBull who wrote (3233)	11/20/1998 11:34:00 AM
From: blake_paterson	Read Replies (1) \| Respond to of 3736

Thanks, SemiBull. My question was along the lines of whether there were exit clauses in the alliance agreement (IPEC-NVLS) that would cause immediate termination in the event of sale-of-company scenarios. BP

To: SemiBull who wrote (3233)	11/22/1998 12:06:00 PM
From: Mr. Sam	Read Replies (3) \| Respond to of 3736

The more I look into it, the more I love this deal with IPEC. The reasons follow: 1) Tremendous synergies Most people dont realize it, but these companies are only about 10 miles apart. That greatly reduces the risk and the cost of the merger. They will have lower costs due to a smaller number of field service offices, lower sales expenses, lower administration expenses, and dramatically lower R&D expenses. Based on my back-of-the-envelope estimates, it looks to me like the deal is slightly dilutive to earnings if no cost savings are assumed, but it will definitely be accretive within a few quarters based on the synergies. 2) Improvement in R&D quality Putting together the best of the engineers from both companies is almost certain to improve the effectiveness of the R&D dollar. I don't see any significant synergies between the product lines of the two companies for the existing generations, but the next-generation product of the combined company should be superior to what either could have offered independently. 3) Elimination of a competitor From either companies' point of view, a competitor has been eliminated. They can now compete with AMAT and the other smaller competitors from a position of much greater critical mass. This will be very important during the impending upturn. 4) Improvement in financials IPEC greatly improved its balance sheet. The bankruptcy risk premium should come out of that stock, increasing its market value. For SFAM, the balance sheet is weakened, but they have now diversified their installed base of customers and reduced their break-even point (due to cost savings). 5) No price premium paid IPEC was not in a very good negotiating position, and SFAM made the most of it. It's amazing to get a merger like this with substantial loss of control by IPEC without any price premium. To me, SFAM has made appropriate use of its cash during the downturn and has shown quality leadership by Faubert and the SFAM Board. Roger Marach is also looking quite smart for floating the most recent secondary offering when the stock was at much higher prices to generate the money that made this merger attractive to IPEC. Profitable investing, Mr. Sam