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Micron purchasing Elpida, Rexchip stocks also included

Posted: 04 Jul 2012 ?? ?Print Version ?Bookmark and Share

Keywords:DRAM? Japanese IC market? merger?

Micron Technology Inc. has confirmed that it has signed a definitive "sponsor agreement" to acquire and support Elpida Memory Inc. for $2.5 billion. Micron has also stated that it will also buy the 24 percent share of Rexchip Electronics Corp. from Powerchip Technology Corp. for approximately $334 million.

Elpida has already a 65 percent stake in Rexchip. Both companies could combine to produce more than 200,000 300-mm wafers per month. The acquisitions would increase Micron's manufacturing capacity by about 50 percent. On the other hand, Elpida is operating under bankruptcy protection legislation under the jurisdiction of the Tokyo District Court.

Both transactions are subject to approval by Elpida creditors, the Tokyo District Court, and other customary antitrust approvals. Elpida's reorganization plan is currently anticipated to be submitted to the Tokyo District Court for approval in August 2012. The transactions are expected to close in the first half of 2013. Micron's purchase of the Powerchip group's Rexchip shares will occur upon close of the Elpida transaction.

With the completion of the agreement, Micron is set to acquire 100 percent of the equity of Elpida for an estimated $750 million to be paid in cash at closing. In addition, Micron will pay roughly around $1.75 billion, tp paid in annual instalment payments through 2019. This payment will be taken from cash flow generated from Micron's payment for foundry services provided by Elpida, as a Micron subsidiary. The money will be used to satisfy the claims of Elpida's secured and unsecured debtors, Micron said.

The agreement has also included terms for Micron providing funds for Elpida capital expenditures and to maintaining Elpida's operations and employees. At the same time, Micron also announced it will buy 24 percent of Rexchip Electronics Corp. from Powerchip Technology Corp. and affiliates for approximately $334 million. Elpida owns about 65 percent of Rexchip. With the two deals, Micron is set to procure an 89 percent stake in Rexchip.

Elpida's primary strength is mobile DRAM, targeted at smartphones and tablet computers while Micron holds a strong suite in enterprise DRAM for PCs and servers as well as providing NAND and NOR nonvolatile memory.

- Peter Clarke
??EE Times US

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