Tokyo Electron, US-based Applied Materials, scrap merger

Japanese semiconductor equipment maker Tokyo Electron and US rival Applied Materials cancelled their merger Monday after US competition regulators rejected the multi-billion dollar deal.

The announcement comes several days after Comcast and Time Warner Cable scrapped their mega-merger plans, due to opposition by the US Department of Justice to the whopping $45 billion tie-up of the cable and broadband Internet giants.

Applied Materials said it had called off its nearly $10 billion bid for Tokyo Electron, first announced in 2013, after proposed tweaks to the deal had failed to convince DoJ antitrust officials.

The deal would have combined the two largest providers of non-lithography semiconductor manufacturing equipment.

Both make machines that prepare silicon wafers for imprinting with the circuits that turn them into processors.

The Justice Department, explaining its opposition to the deal, said that the proposed remedy to its concerns "would not have replaced the competition eliminated by the merger, particularly with respect to the development of equipment for next-generation semiconductors," it said.

"The semiconductor industry is critically important to the American economy," it noted.

"Based on the DoJ's position, Applied Materials and Tokyo Electron have determined that there is no realistic prospect for the completion of the merger," Applied Materials said in announcing the deal was off.

Tokyo Electron said its board of directors agreed to the cancellation because "there remains a gap between the view of Tokyo Electron and Applied Materials and the view of the United States Department of Justice, and it became apparent that such a gap will not be able to be bridged".

Neither company will pay termination fees, they said.

Shares in Tokyo Electron closed 1.47 percent lower at 7,697.0 yen before Applied Materials announced the cancellation of the merger.

In New York afternoon trade, Applied Materials tumbled 7.6 percent to $20.15.

-- Bloomberg News contributed to this report --