Applied Materials eyes ASMI businesses

By Niclas Mika

AMSTERDAM (Reuters) - Applied Materials Inc (AMAT.O) has approached beleaguered Dutch semiconductor equipment maker ASM International NV (ASMI.AS) (ASMI.O) to buy a significant part of its business for $400 million to $500 million.

Shares in ASMI jumped as much as 23 percent to an eight-month high on Friday after the company said its U.S. rival had expressed interest in two of its businesses that make machines to deposit thin films of materials on silicon wafers.

Petercam analyst Eric de Graaf said Applied Materials was trying to pick out the best parts of ASMI's loss-making "front end" business, potentially leaving ASMI with low-growth and low-margin activities.

"We do not believe that management will find that acceptable," De Graaf said, adding it could however be the starting point for a bid for all of ASMI or the whole front-end business, which makes machines for the early stages of chip production.

By 1018 GMT, ASMI shares were up about 15 percent at 19.41 euros.

The Applied Materials approach -- which ASMI said was made orally -- adds pressure on ASMI's management, which is locked in a dispute with activist investors who are trying to sack the chief executive and replace the board.

A Dutch court has given the firm and its shareholders until June 23 to work out their differences.

Both British pension fund manager Hermes and fellow activist investor Fursa Alternative Strategies declined comment.