CORNELIA FOCUS ASMI awaits court decision; investors wait for Applied Materials

ASM International N.V. on Monday filed documents with the Amsterdam Enterprise Chambers, based on meetings the company had with shareholder activist Hermes Focus Asset Management Ltd., and now it will wait for the court to make its conclusions, ASMI investor relations spokesman Eric Kamerbeek said.

On Friday, ASMI rejecting a combined bid from Applied Materials Inc. and Francisco Partners worth between $600 million and $800 million, for ASMI's front-end operations. ASMI said the bid 'significantly' undervalues the operations and 'fails to reflect its future prospects.'

Analysts said ASMI signalled it was willing to sell its front-end operations, but for the right price. They said that shareholders would have the last word on any deal.

'Will (shareholders) wait the (at least two years) time necessary for strategic measures to kick in and unlock value in the operations? Or take the value in cash now?' Theodoor Gilissen analyst Win-Yen Choi said.

Choi said management may try to continue defending its position of keeping both ends, but that it would become only more difficult for Del Prado to silence shareholders.

Analysts have estimated the value of the operations more than $1 billion.

Kamerbeek told Thomson Financial News that Hermes has given an opinion on the offer, but declined to comment further.

Kamerbeek also declined to give a time line for the court to make a decision, saying the court could be 'unpredictable'.

Monday was the deadline for ASMI to reach a compromise with shareholders, or risk an extraordinary meeting on the proposed dismissal of CEO Chuck del Prado.

The courtroom battle was initiated by shareholders led by Hermes after the ASMI foundation invoked a poison pill tactic effectively thwarting the shareholders' attempt to dismiss Del Prado.

However, the Dutch media on Monday reported that parties could request to postpone the deadline, in view of recent developments -- a move analysts called 'logical' and in the interest of all parties.

SNS Securities analyst Victor Bareno said he felt Friday's announcement increased the chance of a deal between ASMI and Applied Materials, for the right price.

The analysts said Applied Materials would still be able to pay about $200 million more for ASMI.

'On the other hand, we do not expect Applied Materials to quickly agree with a price of $1 billion, as the current offer already implies a steep premium compared to the negative value of Front-end befor the offer,' Bareno said.

The analyst rules out a bidding war for the operations, saying that the right of first refusal means that a competing offer for the activities is not likely.

SNS increased its price target to 22.50 euro while keeping its rating at 'buy'.

Wing-Yen Choi said it was possible Applied Materials could come out with a statement, showing 'at least some reaction' to ASMI's rejection.

'They could raise the bid price (as) it is clear ASMI management want more,' the analyst said.

The analyst noted that a sale of the Front-end would likely lead to the delisting of ASMI on Amsterdam.

Petercam's Eric de Graaf said ASMI rejected the offer on grounds he found difficult to agree with, considering the lack of profitability seen recently for the Front-end operations.

'I think the arguments are fairly thin but I understand that that is how discussions work,' the analyst said.

He said ASMI needed to communicate to 'the world' whether a compromise was reached, not reached, or postponed.