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Micron wins bid to buy Elpida

Posted: 09 May 2012 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? Elpida bankruptcy? memory chips?

Quoting a source that claims to have direct knowledge of the deal, Reuters has reported that Micron Technology Inc. has won the exclusive right to negotiate to buy bankrupt Japanese DRAM maker Elpida Memory Inc. The report noted that Micron offered $2.5 billion (?200 billion) for Elpida.

Part of the $2.5 billion bid will go toward paying down Elpida's debt load, which stands at about $5.5 billion, according to the Reuters report. The source the report quoted also speculated that Micron's bid may be too low for Elpida to accept.

Micron appeared to be the most logical winner as SK Hynix has reportedly dropped out of the bidding. Elpida, which filed for bankruptcy earlier this year after a government bailout failed to materialize, began soliciting bids in March to satisfy its obligations to creditors.

Citing market research provided by IHS iSuppli, the Reuters report noted that the acquisition of Elpida would boost Micron's DRAM market share to 25 percent, surpassing SK Hynix Inc. for the No. 2 position among global DRAM vendors. Samsung Electronics currently holds the top spot in the DRAM market.

A separate Reuters report, which cited Japan's Jiji news agency as its source, said Micron would invest more than $3.8 billion in Elpida's fabs in Japan and Taiwan over the next five years.

The report also quoted Brad Warden, an analyst for Waddell & Reed, saying "The most important thing is, after this deal you end up with three major players in DRAM, which makes it a more rational market, with more rational capital decision-making and probably more stability from a pricing standpoint." Warden also noted that Micron's offer was half a billion dollars more than he had expected.

Micron held $2.1 billion of cash and short-term investments, while long-term debt totaled $2.2 billion, according to the company's earnings statement for the quarter ended March 1. It issued an additional $870 million of convertible senior notes in April.

Dylan McGrath
??EE Times

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