Tokyo Electron: The Competitive Consolidation and Antitrust Challenge
(8 pages of text)
Case (Pub Mat)
In September 2013, Tokyo Electron Limited announced a merger with Applied Materials Inc. The deal would place the new entity in the leader position in the highly consolidated global semiconductor manufacturing equipment industry, which counted Intel Corporation and Samsung Group as major customers. Due to antitrust issues, the deal was eventually cancelled. Shortly after, in October 2015, Lam Research Corporation announced a merger with KLA-Tencor Corporation. If this deal was accepted, the market would be led by three companies—Applied Materials Inc., ASML Holding, and Lam/KLA-Tencor—while Tokyo Electron would be marginalized. Given the tremendous cost pressures from the consolidated competitors and powerful customers, should Tokyo Electron initiate another merger to consolidate its position? Were there other effective competitive options? What could it learn from its failed merger with Applied Materials Inc.?
This case is intended for undergraduate and graduate-level business school programs in courses on mergers and acquisitions (M&As), industry analysis, competitive strategies, and global business and strategic management. After completion of this case, students will be able to
- understand the challenges and strategies of companies competing in highly
competitive and consolidated industries;
- assess the affect that high cost, innovation pressures, and environmental uncertainties have on these strategies;
- evaluate the use of M&As as a means of overcoming a demanding industry environment and strengthening the company’s competitive position;
- examine how the success of M&A deals is determined by the tension between the antitrust risk and the competitive pressure in a highly consolidated industry;
- analyze the industry, the company, and the merger plan; and
- give strategic recommendations for the company to move forward.
Japan; United States, Large, 2015
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