Sterling Capital pushes Axcelis to negotiate with Sumitomo

By Lisa Kerner

Charlotte, N.C., May 2 - The failure of Axcelis Technologies, Inc.'s nominated directors to receive a majority vote in support of their re-election demonstrates shareholders' discontent with the board's failure to "fully engage" Sumitomo Heavy Industries, Ltd. in negotiations that could lead to a transaction that fairly values Axcelis, according to Axcelis shareholder Sterling Capital.

In a letter to company chairman and chief executive officer Mary Puma, Sterling Capital said that rather than battle its shareholder base, Axcelis should "embrace the steps necessary to drive shareholder value via a transaction with Sumitomo."

It was previously reported that Sterling Capital, an 11.8% shareholder, would vote "withheld" with respect to the three candidates nominated for re-election to Axcelis' board of directors at the annual meeting on May 1.

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

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

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.

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.

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

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