We are raising the ratings on U.S. semiconductor manufacturing equipment provider Lam Research based on an improved business risk profile following the pending merger with Novellus Systems Inc. (unrated) in a stock-for-stock transaction valued at about $3.3 billion. We are raising the corporate credit rating to 'BBB-' from 'BB+', assigning a positive outlook, and removing the rating from CreditWatch. We are also raising the issue-level ratings on the company's $450 million senior unsecured convertible bonds due 2016 and $450 senior unsecured convertible bonds due 2018 to 'BBB-' from 'BB+'. The positive rating outlook reflects our view of potentially enhanced profitability and a leadership position if the merger integration is successful and Lam Research maintains its current financial risk profile. (Watch
