Japan's Sumitomo Heavy Industries Ltd. and private equity firm TPG unveiled a final bid Monday to acquire Axcelis Technologies Inc., raising their offer to $6 per share in cash, or $630 million.

Heavy machinery maker Sumitomo and buyout shop TPG bumped up their offer from $5.20 per share.
The revised proposal represents a 48.5% premium to Beverly, Mass.-based Axcelis' closing share price of $4.04 on Feb. 8, the last trading day before the initial proposal was made public and an 11% premium to the stock's Friday closing price of $5.37.

The bidders said they would not increase the offer again.

In a letter to Axcelis' board, Sumitomo chairman Yoshio Hinoh said the bidders were disappointed by the rejection of their proposal but has had "a very constructive dialogue" with Axcelis shareholders representing a substantial majority of the outstanding shares.

In late February, Axcelis, which makes equipment used in manufacturing semiconductors, rejected Sumitomo's initial offer, saying it undervalued the company and failed to reflect its long-term potential.

Sterling Capital Management, which owns 11.9% of Axcelis, urged the semiconductor-equipment company to solicit other bids, according to a filing with the Securities and Exchange Commission. Sterling said a "fair price" for Axcelis would be $7 per share to $7.50 per share.

Hinoh added, however, that the offer price was raised to $6 per share based in part on the dialogue with shareholders, and that it "exceeds precedent premiums on similar transactions" in the semiconductor capital equipment industry.

"We firmly believe this is a full and fair price, and our proposal provides Axcelis shareholders a unique opportunity to immediately receive value superior to what Axcelis would be able to achieve on its own," Hinoh wrote.

Sumitomo reiterated that its offer does not hinge on financing and it is prepared to commence with due diligence process immediately.

Sumitomo and Axcelis have a joint venture in Japan called SEN. Sumitomo, Axcelis and SEN could compete more effectively by sharing resources, technology and customers, Sumitomo said. "The combined entity would further benefit from access to TPG, which is our minority partner and financing source in this transaction," the Japanese company said.

But Axcelis previously said Sumitomo's offer failed to compensate it for the recent investments it has made to develop new products and left Axcelis shareholders with inadequate value in return.

Axcelis has turned to Goldman, Sachs & Co. for financial advice. Wachtell, Lipton, Rosen & Katz and Edwards Angell Palmer & Dodge LLP are the company's attorneys. Sumitomo and TPG are using Laurence Braham and Richard Hardegree of Lehman Brothers Inc. and Daiwa Securities Group Inc. for financial advice and Morrison & Foerster LLP and Skadden, Arps, Slate, Meagher & Flom LLP for legal counsel.

Axcelis shares traded at $5.62 late Monday morning. -- Donna Block