Japan’s Advantest says to buy Verigy for $1.1 billion

TOKYO (Reuters) – Japan’s Advantest Corp (6857.T: Quote, Profile, Research), the world’s No. 2 maker of chip-testing equipment, said on Monday it has agreed to buy U.S.-listed Verigy Ltd (VRGY.O: Quote, Profile, Research) for about 90.9 billion yen ($1.1 billion) to bolster its position in testers for chips used in smartphones and other mobile devices.

Verigy, which has its headquarters in Singapore, said earlier it had dropped a plan to buy smaller rival LTX Credence (LTXC.O: Quote, Profile, Research).

Advantest is strong in memory chip testers, but faces tough competition from global leader Teradyne Inc (TER.N: Quote, Profile, Research) in non-memory testers for the fast-growing smartphone market.

By acquiring Verigy, Advantest could control as much as 48 percent of the global chip-testing market, more than Teradyne’s 40 percent, an analyst at brokerage MKM Partners estimated last year.

Some of the billions of dollars worth of merger and acquisition deals in the pipeline in Japan may get stalled by the crisis following the March 11 earthquake and tsunami, which has left about 27,000 people dead or missing.

The country is still struggling to bring a stricken nuclear plant under control.

Private-equity firm Bain Capital’s planned $3.4 billion buyout of Japanese restaurant chain Skylark has been put on hold as banks want to assess the impact of the earthquake, bankers said this month.

However, steel firms Nippon Steel (5401.T: Quote, Profile, Research) and Sumitomo Metal Industries Ltd (5405.T: Quote, Profile, Research) submitted a proposal for their planned merger to Japan’s antimonopoly watchdog just a week after the disaster devastated northeastern Japan.

($1 = 81.325 Japanese Yen)

(Reporting by Mariko Katsumura and Isabel Reynolds; Editing by Chris Gallagher)

Japan’s Advantest says to buy Verigy for $1.1 billion