Micron confirms Elpida deal, also plans Rexchip purchase

LONDON – Memory chip company 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 said it will also buy the 24 percent share of Rexchip Electronics Corp. from Powerchip Technology Corp. for approximately $334 million.

Elpida has a 65 percent stake in Rexchip and the companies together can produce more than 200,000 300-mm wafers per month. The acquisitions would increase Micron's manufacturing capacity by about 50 percent. 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.

Under the agreement, Micron will acquire 100 percent of the equity of Elpida for 60 billion yen (about $750 million) to be paid in cash at closing. In addition, Micron will pay 140 billion yen (about $1.75 billion) paid in annual installment payments through 2019 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 also calls for Micron to provide funds for Elpida capital expenditures and to maintain Elpida's operations and employees, subject to detailed conditions.

At the same time Micron also announced it will buy 24 percent of Rexchip Electronics Corp. from Powerchip Technology Corp. and affiliates for about NT$10 billion (about $334 million). Elpida owns about 65 percent of Rexchip so, the two deals will give Micron an 89 percent stake in Rexchip.

Elpida is strong in mobile DRAM, targeted at smartphones and tablet computers while Micron is strong in enterprise DRAM for PCs and servers as well as providing NAND and NOR nonvolatile memory, Micron said.

"We are creating the industry-leading pure-play memory company," said Micron CEO Mark Durcan, in a statement.
 

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