What: Shares of semiconductor equipment vendor KLA-Tencor (NASDAQ:KLAC) slumped on Wednesday after the company disclosed that receiving regulatory approval for its previously announced merger with Lam Research (NASDAQ:LRCX) may require more time than expected. KLA-Tencor stock was down 10% at 2:45 p.m. ET, while shares of Lam Research were down 5%.
So what: The merger between KLA-Tencor and Lam Research was originally announced in October of last year, with Lam Research planning to acquire all outstanding shares of KLA-Tencor for cash and stock. The companies expected the deal to close by mid-2016 at the time of the deal, pending regulatory approvals. An update in May disclosed that the U.S. Department of Justice had requested additional information, but that the companies still expected the deal to close during the third calendar quarter.
KLA-Tencor and Lam Research now believe that it is more likely that the process of obtaining regulatory approval from all relevant agencies won't be complete until after Oct. 20, the outside date set in the merger agreement. It's unclear from the disclosure whether the ultimate approval of the deal is at risk.
Now what: With shares of both companies falling on the potential delay, there's at least some concern that the merger will have a more difficult path to approval than previously thought. The companies don't plan on giving updates on negotiations with individual regulatory agencies, and offered no comment on what would occur if Oct. 20 passed without the necessary approvals.