More consolidation has hit semi-conductor equipment manufacturers with Veeco Instruments and FEI Company announcing they have merged in a $1 billion stock deal.

The companies said based on their combined sales of $825 million last year, the merger creates the sixth largest U.S. semiconductor equipment company and the third largest U.S. supplier of metrology equipment to the technology industry.

Veeco Instruments, based in Woodbury, NY, makes process equipment and metrology tools for the optical telecommunications/wireless, data storage, semiconductor and research markets. It has also acquired or taken stakes in a string of companies in the past five years, buying it facilities in California, Colorado, Arizona, Minnesota and global sales offices in Europe, Japan and Asia Pacific.

The Hillsboro, Oregon-based FEI makes metrology, or calibration, tools for the semi-conductor industry. It's also known as a 3D innovator and leading supplier of structural process equipment for analyzing sub-micron structures for the global chip, data storage and structural biology sectors.

Vahe A. Sarkissian, the chairman, president and CEO of FEI, is to become chairman of the board and chief strategy officer of Veeco FEI. Edward H. Braun, Veeco's chairman, president and CEO will remain CEO and president.

As part of the announcement, Sarkissian said the merger has compelling strategic value and will broaden its product offers with little overlap.

"The new Veeco FEI will be far better positioned to capitalize on the economic upturn, with a combined management team that has a proven track record of building companies with strong revenue and profit growth."

Under the terms of the deal, the Hillsboro, Oregon-based FEI will become a wholly owned subsidiary of the renamed Veeco FEI, which will remain headquartered in Woodbury, NY. The company's ticker symbol will remain as VECO. Each company expects to meet guidance provided for the second quarter of 2002.

The combined company now counts 2,900 employees.

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