UPDATE 1-Zygo board withdraws merger recommendation Tue Jan 20, 2009 7:26pm EST MARKET NEWS
LOS ANGELES, Jan 20 (Reuters) - Zygo Corp (ZIGO.O)on Tuesday said its board has withdrawn its recommendation for a takeover by Electro Scientific Industries Inc (ESIO.O), suggesting the $173.5 million deal could be derailed.
Zygo, which supplies optical metrology instruments, said the merger will remain in effect unless terminated in accordance with its terms, which give Electro Scientific the right to end the deal as a result of the Zygo's board's withdrawal of its recommendation.
A spokesman for Electro Scientific, which supplies photonic and laser systems, was not available for comment.
Zygo said it notified Electro Scientific of its board's decision following a reevaluation of the deal due to changes in conditions since the deal was announced on October 15, 2008.
Under the deal, Zygo shareholders would get 1.0233 shares of Electroni Scientific stock for each share of Zygo stock. (Reporting by Sue Zeidler; editing by Carol Bishopric)
Well, say what you will about how dumb the initial merger proposal was, but give the board full kudos for waking up and changing course before it was too late. The irony of course is that today ESIO's shares are up while Zigo's are down big, despite ZIGO begin demonstrably the better of the two companies. Presumably the board has decided if ZIGO is gonna fail, the wounds will be self-inflicted while untethered to the dead mule that is ESIO. Once again, Zigo's future is its own hands. Now the board needs to get rid of Robinson and replace him with some one with fresh ideas and outlook. We all saw his confidence in ZIGO with this merger idea.
ESI market makers driving their stock up trying their best to save face. ESI just wanted to rob Zygo's piggy bank. ESI sold something like 2 or 3 semi units all year. They need 40M/qtr just to break even. Zygo board saved the company from "Engineering Scavenging Industries." ESI will be in the negative next quarter and all downhill from there.
Looks like the Zygo board did their homework. ESI has KILLED every company it's come in contact with. It would be a shame to see that happen to Zygo. Having worked at esi and still know many people there, it's no secret that esi is THE most bureaucratic little company I've seen in my 40 years of work. All the little empires the little people in management try to create for themselves, stifle company growth and prohibit advancement. This is largely responsible for esi being in business for over 60 years and remaining a tiny company. Good for you Zygo! Don't let the likes of esi and their failed idealogy corrupt your way of life.
It is important to note that ESI also came out with a pre-anouncement on earnings today (after market close). Last qtr of 2008 will come in at approx 26mm in sales compared with 77mm in same quarter in 2007.
It will be interesting to see if the values of the two companies separate much tomorrow. WOW
It doesn't answer the question of "what's next" for Zygo, nor how their earnings will fare for the last quarter, but I can only think that it will be a turn for the good when this deal is finally dead.