Varian investor cries foul play at Applied Materials deal

Varian Semiconductor Equipment Associates (VSEA) is facing the wrath of one of its investors over a $5 billion merger with Applied Materials.

Equipment manufacturer Applied Materials agreed to take over Varian, which specialises in ion implantation, as part of a deal struck in May this year.

The deal seemed to make good sense for both.

Varian’s ion implantation technology could give Applied a way to offer a manufacturing process leading to faster, less power-intensive mobile chips. There are rumours fresh from the mill that Apple is sniffing around.

Applied Materials also considered Varian’s technology for other arms of its company, like in the solar, LED and display markets.

Applied also believed trends in transistor scaling and 3D chip design complement ion implantation.

Of course, it was a lucrative opportunity for Varian, which has seen its stock rise 66 percent this year.

At the time, Varian’s CEO Gary Dickerson asserted that merger was “very attractive for Varian’s customers, employees and shareholders”.

But it seems that Dickerson may have been wide of the mark.

An investor has sued Varian in a US federal court over the misleading manner the deal happened.

Investor David Crane has made a string of allegations against the company, saying shareholders are getting short shrift from the $63 a share deal.

According to BloombergCrane believes shareholders were hoodwinked by directors, breaking US law by issuing misleading proxy materials. 

The shareholders were not told the full story about the sale, Crane alleges, raising questions about why there were only ever negotiations with Applied.

A court is looking over the complaint, filed in Boston.

Unless a judge puts a stop to the transaction, Crane thinks shareholders will be swindled out of a “fair price for their common stock”.