Sterling Capital to withhold vote for Axcelis Technologies director nominees, supports deal with Sumitomo

By Lisa Kerner

Charlotte, N.C., March 28 - Axcelis Technologies Inc. investor Sterling Capital Management said it will vote "withheld" with respect to the three candidates nominated for re-election to Axcelis' board of directors at the annual meeting on May 1.

Sterling, an 11.9% shareholder, disagrees with the board's direction as it pertains to Sumitomo Heavy Industries, Ltd.'s acquisition proposal, according to a schedule 13D filed with the Securities and Exchange Commission.

In a Friday letter to Axcelis, the investor said the company's potential acquisition of its joint venture SEN Corp. is not in the shareholders' best interest.

According to Sterling, Sumitomo is the "most logical acquirer" of Axcelis both strategically and financially.

Axcelis and Sumitomo, which each have a 50% stake in their Japanese joint venture SEN, had been in discussions off and on since July 2006.

Axcelis' board unanimously rejected a revised and unsolicited proposal by Sumitomo and its private equity partner, TPG, to acquire the company for $6.00 per share, the company announced on March 17.

Axcelis chief executive officer Mary G. Puma said the board's decision was based on "extensive valuation analyses" and on the company's trading prices over the last year. Axcelis management has pursued ways to enable Axcelis and SEN to become a single company through operational agreements or an equity transfer, according to Puma.

In February, Axcelis unanimously rejected an unsolicited proposal by Sumitomo, a Tokyo integrated manufacturer, and TPG to acquire the company for $5.20 per share. At that time, Axcelis said the offer was "opportunistic" and ignored the value Sumitomo would obtain by acquiring full ownership of SEN, which licenses technology from Axcelis.

Based in Beverly, Mass., Axcelis makes semiconductor manufacturing equipment.

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