DOW JONES NEWSWIRES
Teradyne Inc. (NYSE:TER) (TER) has agreed to acquire Nextest Systems Corp. (NASDAQ-NMS:NEXT) (NEXT) in a $ 325 million cash deal.
The deal, expected to close first quarter 2008, will allow North Reading, Mass., semiconductor test equipment maker Teradyne (NYSE:TER) to use Nextest's core business in flash memory test making to expand its services into that segment.
Under terms of the agreement unanimously approved by both boards of directors, Teradyne (NYSE:TER) will pay $20 a share in cash for all the outstanding shares of Nextest, a 67% premium to its $11.99 closing price on Tuesday.
Shares of Nextext shot to $19.70 during premarket trading.
The companies estimate that industry to have generated more than $700 million in 2006. Of Nextest's $95.8 million in revenue last calendar year, flash memory tester sales totaled $80 million.
"Nextest brings us a solid flash memory test product line, plus a very capable development and technical support organization," said Teradyne Chief Executive Michael Bradley.
The acquisition is expected to depress 2008 earnings per share, though will slightly boost earnings when excluding items related to the purchase.
The move comes amid worries of a slowdown in the tech sector that some thought could weather the current credit storm. Capital expenditures on information technology is down at many companies that are looking to make cuts amid credit market worries.
Teradyne's (NYSE:TER) third-quarter net income also unnerved some investors - though analysts remained positive - as it fell to $41 million, or 22 cents a share, from $60.6 million, or 31 cents a share.
The company also projected earnings outlook for the fourth quarter of 4 cents to 10 cents a share on $250 million to $275 million of revenue. Analysts were expecting earnings of 21 cents on $335.8 million of revenue.
-John Flowers, Dow Jones Newswires; 201-938-5964; John.Flowers@dowjones.com
(END) Dow Jones Newswires 12-12-07 0832 Copyright (c) 2007 Dow Jones & Company, Inc.
