Israel’s Orbotech, a company that manufactures electronic and industrial products, has been bought by California semiconductor equipment maker KLA-Tencor Corp, according to a company statement on Monday.
This gives Orbotech a valuation of $3.4 billion, making it one of the largest buyouts of an Israeli company as of late. The largest exit is the 2017 acquisition by Intel of Jerusalem-based auto sensor developer Mobileye for a whopping $15.3 billion, preceded by the acquisition of navigation app Waze by Google for $1 billion in 2013.
Orbotech CEO Asher Levy said in a statement, “This acquisition is a true testament to Orbotech’s strong leadership and success. I firmly believe that this deal benefits our employees and creates additional value for our shareholders. Together with KLA-Tencor, we will significantly increase growth potential, accelerate our product development roadmap, and enhance customer offerings. Orbotech will continue to operate under the Orbotech brand as a standalone business of KLA-Tencor based in Yavne, Israel.”
KLA-Tencor President and CEO Rick Wallace said the deal “will open new market opportunities for KLA-Tencor, and expands our portfolio serving the semiconductor industry. Our companies fit together exceptionally well in terms of people, processes, and technology. In addition, KLA-Tencor has had a strong presence in Israel over the years, and this combination further expands our operations in this important global technology region.”
The deal is expected to close before the end of the year, the statement said, after approval from the Board of Directors of each company and subject to the okay of Orbotech’s shareholders. Orbotech said that Barclays and Goldman Sachs acted as advisor to the company in the agreement. JP Morgan served as an exclusive financial advisor to KLA-Tencor.
Levy said Orbotech will continue to operate under the Orbotech brand as a standalone business of KLA-Tencor based in Yavne.
Orbotech, which produces systems for circuit boards and chips, was founded in the 1990s, after a merger between tech company Orbot, created in 1981 in part by brothers Kobi Richter and Yochai Richter, and Optrotech, founded by a team led by Shlomo Barak in 1981. Kobi Richter, who owns 5.4 percent of the company, will receive $180 million for his stake, according to Globes.
In a past interview with the Israeli daily, Levy said, “The chances that someone holds in their hand a smartphone or tablet that Orbotech did not have something to do with its production, design or inspection are pretty much zero.” Orbotech’s equipment is used in three main industries: flat panel displays, printed circuit boards, and semiconductors.
Prime Minister Benjamin Netanyahu congratulated the company and praised the announcement that it would remain Israel-based. “I was happy to hear that the company, which employs 2,500 workers, will continue to operate from Yavneh,” Netanyahu said in a statement. “More good news for Israel’s high-tech industry and economy!”