More ATE consolidation: Teradyne to buy Eagle Test

SAN FRANCISO— Teradyne Inc. has signed a definitive agreement to acquire fellow semiconductor automated test equipment (ATE) vendor Eagle Test Systems Inc. for approximately $250 million in cash, the companies said Tuesday (Sept. 2).

The deal, which is subject to traditional closing conditions including the approval of Eagle Test shareholders, would represent the latest development in an ongoing wave of consolidation in the troubled ATE industry.

Under the terms of the agreement, Eagle Test shareholders will receive $15.65 per share in cash, which works out to a total of roughly $365 million, according to Teradyne. The aggregate purchase price is expected to be approximately $250 million, net of $115 million in cash that Eagle holds, which will be acquired along with the company, and includes the fair value of fully vested employee equity instruments, according to Teradyne (North Reading, Mass.).

The long-awaited wave of ATE vendor consolidation was kicked off early this year when Verigy Inc., the ATE spin-off of Agilent Technologies Inc., closed the acquisition of DFM chip test vendor Inovys on Jan. 7. Two weeks later, Teradyne closed the $325 million acquisition of Nextest Systems Corp.

Credence Systems Corp. in June entered into a definitive agreement to sell its automotive ATE unit in Amerang, Germany to Japan's Advantest Corp. for $5 million. And last month, ATE rivals Credence and LTX Corp. completed their all-stock merger of equals. The Eagle acquisition would seem to bolster Teradyne's product portfolio. Teradyne's strength is in system-on-chip (SOC) ATE, while Eagle Test's products focus on analog, mixed-signal and radio frequency test.

"Eagle Test has a solid franchise in power management and other analog-dominant IC test applications, which will complement the SOC test solutions provided by our FLEX and J750 test systems," said Mike Bradley, president and CEO of Teradyne. "We plan to put the full weight of our worldwide distribution organization behind Eagle Test's ETS product line so customers can benefit from this very cost effective test platform."

The acquisition is expected to close in the fourth quarter of 2008, the companies said, after which Eagle Test will be run as a business unit within Teradyne's Semiconductor Test Division.