U.S.-based memory chipmaker Micron Technology, Inc. (MU: Quote) will buy bankrupt Japanese chipmaker Elpida Memory, Inc. (ELPDF.PK) for an estimated price of 200 billion yen, or $2.52 billion, the Nikkei business daily reported Thursday.
The deal will enable Micron to increase its global market share for Dynamic Random Access Memory or DRAM chips and give it access to Elpida's technology in chips for smartphones and tablets.
According to the Nikkei report, Elpida narrowed down its list of potential sponsors to Micron in early May. Following this, Micron assessed Elpida production facilities as well as technologies and held talks with Elpida's creditors on debt forgiveness.
The Nikkei had earlier reported that creditors of Elpida agreed to forgive 70 percent of the company's total debt of 420 billion yen.
Micron will reportedly use about 140 billion yen of the acquisition price to pay the remaining 30 percent of Elpida's debt. The company will also invest about 100 billion yen in Elpida's fabrication facilities, including a plant in Hiroshima Prefecture, to boost output of DRAMs for smartphones.
Elpida plans to finalize its business rehabilitation plan and submit it to the Tokyo District Court by August 21.
The only remaining DRAM vendor in Japan, Elpida filed for bankruptcy protection at the Tokyo District Court in February this year after failing to secure investments, or a second round of government funding.
Japanese electronics giant Toshiba Corp. (TOSBF.PK) had joined the bid for the bankrupt chipmaker and was earlier seen as the front-runner to acquire Elpida. South Korea's SK Hynix Inc. withdrew its bid for Elpida, while TPG Capital LP and China's Hony Capital, who intended to make a joint offer, were in the final bidding round.
Elpida's results were hurt by falling DRAM prices and a stronger yen. The company, whose customers include Apple Inc. (AAPL), was delisted from the Tokyo Stock Exchange on March 28. Elpida was formed through the merger of NEC Corp. and Hitachi Ltd.'s memory businesses in 1991.
Micron makes DRAM, NAND Flash and NOR Flash memory. DRAM chips are most widely used in personal computers, while NAND Flash memory chips are used in smartphones, tablets and cameras.
Last Wednesday, Micron reported a net loss for the third quarter as margins fell sharply. It marked the company's fourth consecutive quarterly loss.
MU closed Thursday's trading at $5.97, up $0.25 or 4.37 percent on a volume of 34.68 million shares.
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by RTT Staff Writer
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