Israeli firms merge, despite FTC plea

Electronic News, Nov 2, 1992

NES ZIONA, ISRAEL--Optrotech Ltd. and Orbot Systems Ltd. concluded their merger agreement, but the potential remains for Federal Trade Commission intervention in the merger. The U.S. government agency has been studying the merger's possible anti-competitive effects on the printed circuit board inspection market.

The FTC had requested the merger be delayed until a settlement was reached (EN, Oct. 12), but the two firms proceeded with the combination. Just under 6 million shares of new Optrotech stock have been issued to Orbot stockholders in exchange for a 50 percent stake in the new firm, and the combined company said it plans to change its name to Orbotech Ltd.

Hildy Shandell, legal counsel to Optrotech, said the company is "still in negotiations, trying to resolve the concerns of the FTC staff on competitiveness issues." Asked whether the FTC has authority to take action against the business combination, Ms. Shandell said, "They think they have the authority, we don't. They've taken no formal action, and we're continuing our negotiations." She said the company hopes to conclude the talks shortly.

She noted Israeli courts must also go through the formality of approving the merger, but said no difficulties are anticipated. "If the merger is not approved (by the Israeli courts), Orbot will become a subsidiary of Optrotech."

Aaron Mankovsky, president of Orbot's U.S. operation, Orbot Inc., said a new management structure for Orbot's semiconductor-related inspection business would probably be defined by the middle of this month. Both Optrotech and Orbot produce machine vision tools for the printed circuit board and multichip module inspection markets. Orbot's semiconductor and photomask inspection operations were not included in the deal.

In a related matter, Orbot received a multi-system order for its RT-810 photomask inspection tool from mask producer Photronics, which accepted a beta-site machine at its Milpitas, Calif., facility, and will take delivery on additional machines in Q1 of 1993, said Mr. Mankovsky. "Deliveries will continue after that based on Photronics' needs."

Mr. Mankovsky declined to give figures for the number of machines involved or the value of the deal, but noted the list price on the 810 ranges from $1.2 million to $1.4 million.