FormFactor Inc. (“FormFactor”) and Cascade Microtech Inc. (“Cascade”) announced that they have entered into a definitive agreement under which FormFactor will acquire all outstanding Cascade shares in a cash and stock transaction.

For each share of Cascade stock held, Cascade stockholders will be entitled to receive $16.00 in cash and 0.6534 of a share of FormFactor common stock, subject to the terms of the merger agreement. The transaction values Cascade at $21.13 per share, or $352 million in equity value based on the closing price of FormFactor’s stock on February 3, 2016, of $7.85.

This combination creates significant scale by combining complementary market leadership positions in semiconductor test, measurement and characterization applications. By leveraging combined global support and channel investments across a product line that spans from engineering to production test applications, the combined company is uniquely positioned to solve customers’ most difficult test challenges from engineering to production.

The 2015 revenues of the combined company on a pro forma basis would be over $426 million. This transaction is expected to be immediately accretive to FormFactor’s earnings per share. The combined company expects to realize $10 million to $12 million in annualized cost synergies within 18 to 24 months of closing, and to accelerate the tax benefit of monetizing FormFactor’s approximately $300 million in net operating losses (NOLs).

“We are extremely excited to be uniting FormFactor and Cascade today,” said Mike Slessor, FormFactor’s President and Chief Executive Officer. “The combination of our products, technologies, and addressable markets enables us to rapidly take the next step in achieving FormFactor’s strategic growth objectives. At the same time, we are able to realize significant financial synergies that the two companies would not be able to realize on their own.”

“I am enthusiastic about the combination with FormFactor as both companies share a legacy of innovation and technology development”, said Mike Burger, Cascade’s President and Chief Executive Officer. “As a combined entity, FormFactor and Cascade will be the leader in the production probe card and engineering systems markets. The combination of Cascade and FormFactor creates a larger, stronger company that will drive long-term value for our customers, employees, partners, and shareholders.”

Compelling Strategic and Financial Benefits Expected

  • Market Expansion: Expand estimated addressable market from $1.0 billion to $1.4 billion by enabling entry into engineering systems business, providing a platform for future expansion in test, measurement and yield
  • Scale and Diversification: Combined financial, R&D and manufacturing resources to serve larger customer base, with the combined companies’ Top 10 customers representing 62% of combined revenue (down from 83%)
  • Cost Synergies: Annualized cost synergies equivalent to over 25% of combined companies’ non-GAAP operating income
  • Tax Benefits: Enables accelerated monetization of FormFactor’s NOLs
  • Capitalization Optimization: Deploying $120 million cash on hand and borrowing $150 million to drive additional EPS accretion

Mr. Slessor concluded, “Today represents an important next step in the history of both FormFactor and Cascade. With the rapid changes taking place in the semiconductor industry, we are confident that this combination will place us in a strong position to continue to profitably grow our capabilities to serve a global and diverse customer base, while substantially improving our operational and financial metrics.”

Transaction Terms and Approvals Required

Under the terms of the definitive agreement, FormFactor will acquire Cascade for approximately $352 million in aggregate consideration, consisting of $270 million in cash (including approximately $15 million to cash out vested equity awards) and approximately 10.4 million shares of FormFactor common stock, valued at $7.85 per share as of February 3, 2016. At closing, Cascade common stockholders are expected to own approximately 15% of the combined company.

FormFactor intends to fund the cash consideration for the transaction using approximately $120 million of cash on hand and approximately $150 million in debt financing. The transaction is not subject to a financing condition.

The transaction was unanimously approved by the boards of directors of both companies. The transaction is expected to close in mid-2016, pending the receipt of customary regulatory approvals. In addition, the transaction is subject to customary closing conditions, including the approval by Cascade’s stockholders of the merger.

Company, Management and Board of Directors

The combined company will use the name FormFactor, Inc., and continue to trade on the Nasdaq Global Select Market(SM) under the symbol “FORM.”

Mike Slessor, FormFactor’s current Chief Executive Officer will lead the combined company and Tom St. Dennis, FormFactor’s Chairman, will continue in that role. FormFactor anticipates adding one new board member from Cascade’s existing board after the closing.

Both companies announced results for the fiscal fourth quarter 2015 concurrently with this announcement in separate press releases.


Needham & Company, LLC, is acting as exclusive financial advisor to FormFactor and Davis Polk & Wardwell LLP is providing legal counsel. Stifel is acting as exclusive financial advisor to Cascade, and Perkins Coie LLP is providing legal counsel.

Conference Call and Webcast Details

The public is invited to a listen-only live webcast of the joint conference call at 8:30 a.m. Eastern (5:30 a.m. Pacific) to discuss this announcement. The conference call can be joined by dialing 877-331-4217, Conference ID 42589273, within the U.S. and 224-633-1404, Conference ID 42589273, for all other locations. To access the webcast, visit the Investors section of FormFactor’s web site at and click on the Events & Presentations section to view the details. For further details on the transaction, please see the “Transaction Summary” presentation posted on the Investors section of FormFactor’s website. A webcast replay will be available on the FormFactor web site approximately three hours after the conference call concludes. The recording will be available by telephone through February 6, 2016, 8:30 a.m. Pacific, and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering confirmation code 42589273.