1. Why did Lam's shares close down 4 percent on the news? Why did Novellus' shares close up 28 percent? 2. Speculate why Lam used stock rather than some other form of payment? 3. 4. 5. 6. 7. 8. Describe how market pressures on semiconductor manufacturers' impact chip equipment manufacturers and how this merger will help Lam and Novellus better serve their customers in the future. How do the high fixed costs in the highly cyclical chip equipment manufacturing industry encourage consolidation? Is this deal a merger or a consolidation from a legal standpoint? Is this deal a horizontal or vertical transaction? What is the significance of this distinction? What are the motives for the deal? Discuss the logic underlying each motive you identify. How are Lam and Novellus similar and how are they different? In what way will their similarities and differences help or hurt the long-term success of the merger? 9. Speculate as to why Lam announced a $1.6 billion share repurchase program at the same time it announced the deal. 10. Do you believe this deal would help or hurt competition among semiconductor chip equipment manufacturers?