Orbotech Completes Acquisition of Photon Dynamics

Orbotech Ltd announced that it has successfully consummated the acquisition of Photon Dynamics, Inc, a provider of test and repair systems for the liquid crystal (LCD) flat panel display (FPD) industry at an aggregate purchase price of approximately $290 million. In connection with the acquisition, Photon Dynamics sold its wholly-owned subsidiary, Salvador Imaging Inc, to a group of private investors.

This transaction will be immediately accretive to Orbotech on a cash basis, and the company expects, as a result of its completion, to record additional FPD revenues of approximately $45 - 50 million during the remainder of 2008. However, particularly given the prevailing, considerable worldwide economic uncertainty and its potential effect on the electronics industry, the company is currently unable to estimate reliably revenues in subsequent quarters. While the combined level of backlog in FPD systems for the company and Photon Dynamics is at an all-time high and the company believes that it remains firm, the company recognizes the potential for materially adverse trends in future orders, including deferrals. In addition, as a result of this acquisition, Orbotech expects to realize operational synergies of approximately $15 - 20 million in 2009. Given the size and importance of this transaction, the company is in the process of re-aligning its strategy to focus on those areas that will support its long terms goals and objectives, and will continue to tailor its investments to support planned growth and maintain its position of technological pre-eminence in the industries that it serves.

Commenting on the closing of the transaction, Rani Cohen, Chief Executive Officer of Orbotech Ltd, said: "We are very pleased to have consummated this deal in a timely manner, which would have been impossible without the full support of the Photon Dynamics team. By combining the best of both companies, we will be able to realize our shared strategic vision for growth and diversification in the flat panel display industry and to leverage our customer presence, global infrastructures and technical expertise to increase customer value by building upon the advantages of a united yield management platform."

Cohen continued: "During the closing period we have been jointly developing integration plans, which we will now start to implement. The existing Photon Dynamics' business will form part of the Company's FPD Division. We remain clearly focused on honoring all customer commitments and fulfilling delivery requirements. Beyond that, we look forward to building upon and further expanding the range of AOI, test and repair solutions that we are able to provide to FPD manufacturers."

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