Applied Materials shares gain for a fourth straight session on Monday, company to buy Kokusai Electric Corp in $2.2 billion cash deal

Applied Materials Inc (AMAT) said on Monday that it had agreed to acquire all outstanding shares of Kokusai Electric Corporation from global investment firm KKR in a cash deal estimated at $2.2 billion.

Kokusai is a leading provider of high-productivity batch processing systems and services for memory, foundry and logic clients.

The acquisition is expected to help expand Applied Materials global services business and also to boost its customer support capabilities.

Applied Materials shares closed higher for a fourth consecutive trading session on NASDAQ on Monday. It has also been the sharpest daily surge since June 27th. The stock went up 1.71% ($0.77) to $45.68, after touching an intraday high at $47.48, or a price level not seen since August 16th 2018 ($48.23).

Shares of Applied Materials Inc have risen 39.52% so far in 2019 compared with an 18.25% gain for the benchmark index, S&P 500 (SPX).

In 2018, Applied Materials Inc’s stock went down 35.95%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

Applied said it intended to fund the transaction through a combination of balance sheet cash and a term loan facility. The deal is to be finalized within approximately 12 months, subject to approvals from regulatory authorities.

After the deal closes, Kokusai Electric will function as a business unit of Applied Materials Semiconductor Products Group. Its headquarters will remain in Tokyo, while its technology and manufacturing centers – in Toyama, Japan and Cheonan, South Korea.

“Kokusai Electric has a strong culture of innovation along with excellent customer relationships and serves fast-growing areas of the wafer fab equipment market,” Gary Dickerson, President and Chief Executive Officer of Applied Materials, said in a statement.

“By bringing Kokusai Electric’s talented team into Applied, we believe we will accelerate innovation for customers and create significant value for our shareholders,” Dickerson added.

According to CNN Money, the 22 analysts, offering 12-month forecasts regarding Applied Materials Inc’s stock price, have a median target of $52.50, with a high estimate of $65.00 and a low estimate of $40.00. The median estimate represents a 14.93% upside compared to the closing price of $45.68 on July 1st.

The same media also reported that 18 out of 25 surveyed investment analysts had rated Applied Materials Inc’s stock as “Buy”, while 7 – as “Hold”.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for Applied Materials Inc (AMAT) are presented as follows:

Central Pivot Point – $44.07
R1 – $46.23
R2 – $47.56
R3 – $49.72
R4 – $51.89

S1 – $42.74
S2 – $40.58
S3 – $39.25
S4 – $37.93