SAN FRANCISCO—U.S.-based memory chip vendor Micron Technology Inc. has reached a deal to acquire bankrupt Japanese DRAM vendor Elpida Memory Inc. for roughly 200 billion yen (about $2.5 billion), according to an English language report by Japan's Nikkei newspaper.
According to the report, about 140 billion yen (about $1.75 billion) of the acquisition price will go to pay off Elpida's debt. About 70 percent of Elpida's outstanding debt, totaling about 420 billion yen (more than $5.2 billion) won't be repaid, according to the report.
According to C.J. Muse, an analyst with Barclays Capital, the actual purchase price Micron will reportedly pay for Elpida is roughly the $1.75 billion that will go toward Elpida creditors. The remainder, about 60 billion yen ($755.5 million), will go toward investments to upgrade Elpida's production facilities, Muse said.
"While details are still limited, we believe the news is positive for shares," Muse wrote in a report circulated Thursday (June 27).
A spokesman for Micron Thursday declined to comment on the report, citing company policy not to comment on rumor or conjecture.
Muse said the price tag of $1.75 billion is more or less in line with Barclays' initial estimate of $1.75 billion to $2 billion that Micron would pay for Elpida.
According to the Nikkei report, Micron plans to invest about 100 billion yen ($1.26 billion) in Elpida's fabs, including Elpida's flagship fab in Hiroshima prefecture, to boost output.
Micron has been rumored as a suitor for Elpida since the final Japanese DRAM vendor filed for bankruptcy protection early this year. Micron was one of only two bidders to submit a final proposal to acquire Elpida in an unusual auction process that culminated in May. After initially declining to comment, Micron confirmed in May that had bid for Elpida and was in talks with Elpida's trustee to acquire the firm.
Analysts have speculated that an acquisition of Elpida by Micron would have a positive impact on the DRAM industry as a whole, primarily through consolidating and removing some of the industry's DRAM manufacturing capacity. Market research firm IHS iSuppli noted again in a report earlier this week that DRAM pricing has been markedly less volatile since Elpida's bankruptcy in February.
Elpida is due to finalize its business rehabilitation plan and submit it to the Tokyo District Court by Aug. 21, according to the Nikkei report.