After scrapping the merger attempts by the Comcast and the Time Warner Cable, the regulator has moved its march towards tech industry. Applied Materials and Tokyo Electron have cancelled their acquisition process due to regulatory concerns. Back in 2013, both companies went through another unsuccessful attempt to merge but went in vain as US Justice Department gave red signal to the deal. This time also Justice Department didn’t allow both companies to merge as it will stop innovations and kill competition in the industry.
Both corporations have been going through a global effort in order to obtain an approval from the regulators across the world for last 19 months. But they have failed to do so. World’s largest semiconductor Applied Materials was planning to acquired the third largest player in the same sector. The attracted attention of the regulator due to consumer feedback and the lack of option to fill the void created by the merger.
The Tokyo Electron was supposed to pay $1 billion for share buyback and Applied Materials would have spent $3 billion for the same. Most profitable option to deploy the cash of the investors is only through share buybacks or M&A. But the investors are worried because if regulator objects to above mentioned method, the money will be diverted through more dangerous routes. The United States economy is observing many mega-mergers recently after the Comcast deal, now Reynolds American and Lorillard deal is also under the radar. The shareholders of the Applied Materials and Tokyo electrons are closely monitoring the developments related to the deal.