BUSINESS COMBINATIONS

3 Months Ended

Sep. 27, 2015

BUSINESS COMBINATIONS

NOTE 15 – BUSINESS COMBINATIONS

On October 20, 2015, the Company entered into an Agreement and Plan of Merger and Reorganization with KLA-Tencor Corporation (“KLA-Tencor”), under which KLA-Tencor will ultimately become (assuming satisfaction or waiver of all conditions to closing) a direct or indirect wholly-owned subsidiary of Lam Research. Under the terms of the agreement, the Company will acquire KLA-Tencor for approximately $5.0 billion in aggregate cash consideration and approximately 80 million shares of Common Stock, valued at approximately $5.6 billion as of October 20, 2015. Following the merger, KLA-Tencor stockholders are expected to own approximately 32% of the combined company on a pro forma basis.

Each KLA-Tencor stockholder may elect to receive, for all shares of KLA-Tencor common stock they hold at the closing of the transaction, one of the following, determined on a per-share basis: (1) mixed consideration, consisting of both (i) 0.5 of a share of Common Stock and (ii) $32.00 in cash; (2) all-stock consideration, consisting of a number of shares of Common Stock equal to (i) 0.5 plus (ii) the quotient of $32.00 divided by the five-day volume weighted average price of Common Stock over a five trading day period ending shortly before the closing of the transaction (“the five day VWAP”); or (3) all-cash consideration, consisting of (i) $32.00 plus (ii) the product of 0.5 times the 5-day VWAP. KLA-Tencor stockholders who do not make an election will be deemed to have elected the mixed consideration. All-cash and all-stock elections will be subject to proration in accordance with the terms of the merger agreement. The stock component of the consideration is expected to represent a tax-free exchange. Completion of the transaction is subject to certain closing conditions, including but not limited to approval of the transaction by KLA-Tencor’s stockholders, approval of the issuance of Common Stock by the Company’s Stockholders, receipt of all required regulatory approvals, and other customary conditions.

The Company intends to fund the cash consideration from cash on hand from the combined companies and approximately $3.9 billion in debt financing, the Company has obtained a commitment for $4.2 billion of bridge financing from Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC. The Company intends to provide a direct, unconditional guarantee of KLA-Tencor’s senior notes, upon the closing, and plans to repay KLA-Tencor’s term loan from the proceeds of the new debt financing.