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We're confident deal will be approved: AMAT Exec Chairman
Executive chairman of Applied Materials (AMAT) - the world's largest chip equipment maker - told CNBC on Wednesday that he was confident that its merger with rival Tokyo Electron (Tokyo Stock Exchange: 8035.T-JP) would not face any regulatory hurdles.
On Tuesday Applied Materials announced its intention to buy the world's third largest chip equipment maker, in a deal worth $7.06 billion including net debt and excluding cash, according to Reuters data, the firm's largest ever acquisition.
(Read more: Cramer: This merger will not happen )
"We're expecting regulators will look closely at this deal. It is a cross border deal, it is a complex deal, both companies are big companies. But in end we believe, and we're confident it will get approved," said executive chairman Mike Splinter.
A possible hurdle for the deal gaining regulatory approval would be the overlap between the two firms' product lines, but Splinter said he doubted this would be an issue.
"We've looked at our product lines and part of the beauty of the two companies is we're big competitors... but frankly where we actually compete, there is very, very little overlap," he added.
The landmark deal will create a new company valued at around $29 billion to be 68 percent owned by Applied Materials shareholders.
According to Thomson Reuters (Toronto Stock Exchange: TRI-CA) data, the deal will be the second largest foreign purchase of a Japanese company ever.
(Read more: Applied Materials, Tokyo Electron to merge )
The move is part of an ongoing trend of consolidation in the chip-making industry, amid the rising cost of developing cutting-edge chips. Demand for the capital equipment sold by Applied Materials and its competitors' has been declining.
Splinter said he believed the merger would better position the firms to compete in this tough climate. He said he expected grow the firms together, whilst also making savings.
"We think we are going to gain at least three points in market share by putting our companies together, and really be enabled to help our customers solve their high value problems faster and at lower cost," he said.
"Of course, we also think we should be able to improve our performance in the supply chain and save money... we will work at saving money and creating efficiencies," he said.
(Read more: Applied Materials names new CEO; revenue skids 16% )
Applied Materials shares rallied 8 percent in afternoon trade in the U.S. on Tuesday following news of the deal.
Tokyo Electron shares were up 13 percent in early trade in Asia on Wednesday.
The deal is expected to close from the middle of next year.
-By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie
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