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Veeco reportedly in talks to buy German rival Aixtron

Mathew Levy, a mechanical engineer, holds a

Mathew Levy, a mechanical engineer, holds a data wafer near the NEXUS 420si ion beam etching system at Veeco in Plainview in 2012. The machine is used to manipulate thin material for applications such as data storage. Photo Credit: Chris Ware

Veeco Instruments Inc., a Plainview-based maker of equipment for manufacturing light-emitting diodes and hard disk drives, is reportedly in talks to purchase a German rival.

Veeco declined to comment on the report by Bloomberg News that it’s one of several companies in discussions with its competitor, Aixtron SE. “We don’t comment on speculation and rumors,” said a spokesman for the publicly traded company.

Aixtron, which supplies equipment to the semiconductor industry, is holding informal talks with potential buyers as it grapples with the loss of a major customer and weak demand for its products, according to the Bloomberg report, which cited unnamed sources. Bloomberg said the other unnamed potential bidders were Chinese.

Veeco and Aixtron compete in the market for what are known as MOCVD machines, used to make thin films in the manufacture of LEDs used in general and automotive lighting and to backlight TVs, computer tablets and smartphones.

Veeco’s shares rose 61 cents to close at $19.48 Thursday. The stock is down more than 36 percent over the past 12 months.

Stifel, Nicolaus & Co. Inc. analyst Patrick Ho said he would not be surprised if the companies held talks but said he didn’t expect Veeco to buy Aixtron.

“We are not certain that a potential combination would work for Veeco,” he said in a research note. “It would be very difficult on the regulatory front if these two companies were to combine as Veeco and Aixtron comprise over 90 percent of the entire MOCVD market.”

Further, he said that Veeco’s success in competing against Aixtron gives it little incentive to buy the company, making the other bidders more likely to close a deal.

Aixtron shares plunged as much as 43 percent on Dec. 10 after the company said a Chinese client canceled orders. The company’s shares have fallen 41 percent in the past 12 months, giving Aixtron a market value of about 471 million euros ($535 million).

In February Veeco, with about 800 employees worldwide, posted fourth-quarter revenue of $106.5 million, down 6 percent compared with the year-ago period. It cited continuing weak demand for its MOCVD machines.

Semiconductor companies accounted for $85.7 billion worth of deals in the past 12 months, according to data compiled by Bloomberg, as they combined in the face of rising production costs and a shrinking customer list.

A spokesman for Aixtron, which is based near Aachen, Germany, declined to comment, according to Bloomberg.

With Bloomberg News

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