Moody’s might raise KLA-Tencor

Moody's Investors Service said it placed KLA-Tencor Corp.’s Baa2 senior unsecured rating under review for upgrade following the Oct. 21 announcement that it will be acquired by Lam Research Corp. (Baa1, outlook stable) for $10.6 billion.

Lam Research plans to finance the transaction with a combination of new common equity, debt financing and cash on hand.

Both boards have approved the transaction, which, subject to customary closing conditions and regulatory approvals, is expected to close in the first half of calendar 2016.

If the acquisition closes as planned, the outcome of the KLA review will likely result in a one notch upgrade to Baa1 because Lam Research plans to provide a direct, unconditional guarantee of KLA's bonds.

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