ALIGN-RITE AGREES TO PHOTRONICS BUYOUT.

Byline: Dave McNary Staff Writer

Align-Rite International Inc., a longtime producer of photomasks for semiconductor design, announced Wednesday that its board has agreed to a $115 million buyout by rival Photronics Inc.

The deal, announced after the stock market closed, calls for Align-Rite shareholders to receive $23.06 of Photronics stock for each share - a 58 percent premium to Align-Rite's $14.625 closing price Wednesday.

``The premium reflects strong growth prospects for the business and is comparable to other deals in this industry,'' said Photronics spokesman Mike McCarthy.

Photronics, of Jupiter, Fla., has no plans for any layoffs at Burbank-based Align-Rite. The transaction, expected to close during next year's first quarter, will give Align-Rite shareholders a 16 percent stake in Photronics.

The companies said the merged entity will replace DuPont's photomask business as the world's largest supplier of photomasks, which are glass and quartz plates used to transfer circuit patterns onto semiconductors. The combination will have about 1,500 employees and annual sales of about $300 million.

Computer industry researcher Dataquest has forecast that the annual growth rate for photomasks is approaching 60 percent and predicted the worldwide market will top $5 billion in 2004.

Shareholders of both companies and government regulators will be asked to approve the deal.

Align-Rite Chairman and Chief Executive Officer James MacDonald, who founded the company in 1970, will remain as president of Align-Rite and become the fifth member of the Photronics Office of Chief Executive along with joining the Photronics board. He said in a statement that the deal will lead to improved capacity utilization, shorter delivery times and higher levels of efficiency.

In its first quarter ended June 30, Align-Rite's earnings rose 23 percent to $1.1 million, or 23 cents a share, on a 5 percent rise in sales to $13.4 million.