Are Mattson, Semitool, or Aixtron Possible Targets For AMAT?

 |  Includes: AIXG, AMAT, MTSN, SMTL
by: Eric Savitz

Shares of Mattson Technology (NASDAQ:MTSN), Semitool (SMTL) and Aixtron (NASDAQ:AIXG) are higher on speculation that the companies could be potential acquisition targets for Applied Materials (NASDAQ:AMAT).

The story apparently stems from comments Friday morning from Stanford Group analyst Tim Summers. Summers wrote a note on Applied on what to expect from the company’s fiscal first quarter earnings announcement, which is due on Tuesday. In a his note, he mentioned that he has been hearing “increasing chatter in AMAT’s supply chain” that the company could have additional acquisitions in the pipeline. He noted that AMAT at its recent analyst meeting specifically highlighted the etch market as an area where it intends to sharply increase market share over the next three years.

On his firm’s sales call Friday morning, Summers expanded on what he said in the note. In an interview this afternoon, Summers said he mentioned three companies as potential targets: Mattson, Semitool and Aixtron. He said Aixtron would be the least likely target, although AMAT might be interested in its atomic layer deposition technology. Semitool, he says, would provide the company new capabilities in copper deposition. The most interesting target, he says, might be Mattson, which is in a market called “resist strip,” an area related to etch where Applied does not currently play.

Summers stressed that he has no insider knowledge; no one told him specifically that AMAT is going to buy one of these companies. But he does say that there is talk in the industry of pending consolidation, that AMAT is likely to do more acquisitions, that the company is announcing earnings next week, and that AMAT has expressed interest in the areas in which these three companies play.

As for the quarter, Summers sees orders down 5%, revenues of $2.08 billion and GAAP EPS of 21 cents. He says the company could say that global cap ex will be down 10%-15% in 2008, in line with previous guidance. He expects AMAT to say orders have troughed. Summers has a Buy rating and $25 target on the stock.

In Friday’s trading:

  • Mattson is up 63 cents, or 12.1%, at $5.85.
  • Semitool is up 30 cents, or 3.9%, at $7.97.
  • Aixtron is up 18 cents, or 1.5%, at $12.18.
  • Applied Materials is up 35 cents, or 2%, at $18.