UPDATE 1-Japan’s Advantest says to buy Verigy for $1.1 billion

* Deal is latest to go ahead in Japan despite quake

* Advantest faces competition from Teradyne in smartphone
market

(Adds details)

TOKYO, March 28 (Reuters) – Japan’s Advantest Corp ,
the world’s No. 2 maker of chip-testing equipment, said on
Monday it has agreed to buy U.S.-listed Verigy Ltd 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
. [ID:nL3E7ES09O]

Advantest is strong in memory chip testers, but faces tough
competition from global leader Teradyne Inc 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. [ID:nL3E7ES0F3]

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. [ID:nLDE72F25V]

However, steel firms Nippon Steel and Sumitomo
Metal Industries Ltd submitted a proposal for their
planned merger to Japan’s antimonopoly watchdog just a week
after the disaster devastated northeastern Japan.
[ID:nL3E7EI0TK]

($1 = 81.325 Japanese Yen)

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

UPDATE 1-Japan’s Advantest says to buy Verigy for $1.1 billion