* Advantest shares rise 10 pct vs Nikkei up 4 pct
* Advantest needs help to compete in non-memory testers - analyst
* Japan M&A will not be thrown off course by quake - banker (Adds background, comment)
By Isabel Reynolds and David Dolan
TOKYO, March 22 (Reuters) - Japan's Advantest appeared on the verge of clinching a $908 million acquisition of U.S.-listed chip tester Verigy , a sign some Japanese firms will still be able to push through deals even after the country's catastrophic earthquake.
Shares of Advantest, the world's No.2 maker of chip-testing equipment, surged as much as 13 percent -- their biggest one-day percentage gain in two years -- after Verigy said it saw the Japanese company's offer of $15 per share better than its own $424 million plan to buy smaller rival LTX Credence .
Verigy, which has its headquarters in Singapore, said in a statement on Monday the cash buyout offer from Advantest was a "superior" option to its own plan to buy LTX Credence.
Buying Verigy would give Advantest a much-needed boost in the market of testers for chips used in smartphones and other devices.
Advantest is strong in memory chip testers, but faces tough competition from global leader Teradyne Inc in testers for the fast-growing smartphone market.
"Advantest recognises that to compete with Teradyne in non-memory testers, it needs to bulk up and strengthen its technology base," said Damian Thong, a technology analyst at Macquarie Capital Securities in Tokyo.
"Combining with Verigy is one of the best steps they could take in that direction," he said.
By acquiring Verigy, Advantest could control as much as 48 percent of the global chip-testing market, more than Teradyne's 40 percent, an analyst at brokerage MKM Partners estimated last year.
JAPAN M&A TO SURVIVE
Japanese companies are currently involved in mergers and acquisitions deals totalling $25.7 billion, according to Thomson Reuters data. Some of those deals may get stalled by Japan's crisis.
Private-equity firm Bain Capital's planned $3.4 billion buyout of Japanese restaurant chain Skylark has been put on hold as banks want to assess the impact of the earthquake, bankers said last week.
However, steel firms Nippon Steel and Sumitomo Metal Industries Ltd submitted a proposal for their planned merger to Japan's antimonopoly watchdog on Friday, just a week after the earthquake and tsunami devastated northeastern Japan.
While the disaster in Japan could put pressure on deals in the short term, more firms may start to look for overseas opportunities in the long run, said a Tokyo-based banker.
"We really have a feeling that cross-border M&A is still very much on the agenda, that people want to push forward deals already in the pipeline," said Jerome Finck, a director at Global Advisory Japan, the local associate of Anglo-French banking group Rothschild.
"I'm pretty sure that in the mid term and long term there will be an increase in cross-border activity -- in-out, so basically Japanese buying abroad. Maybe not as a direct result of the earthquake, but a thinking that it is better to diversify your risk and production base and resources outside Japan as well."
Advantest originally offered $12.15 per share for Verigy, but lifted that in December to $15, representing a premium of nearly 66 percent on Verigy's stock price before the initial offer.
Semiconductor makers such as Intel rely on equipment from Advantest and Verigy to test the efficiency and quality of their chips.
Shares of Advantest were up 9.9 percent at 1,451 yen at 0547 GMT, outperforming a 4.3 percent rise in the benchmark Nikkei average . (Reporting by David Dolan, Nathan Layne; Editing by Edmund Klamann and Vinu Pilakkott)