Hyundai opts out of buying Hynix

MEMORY MAKER Hynix has hit a major snag in its plans to be bought by Hyundai, after Hyundai ruled out bidding for the firm.

Hyundai Heavy Industries, which among many things is the world's largest shipbuilder, was thought to be readying a bid for Hynix, however Bloomberg reports that Hyundai will not submit a letter of intent to buy Hynix, claiming any deal would have little synergy with its existing businesses.

Hynix's shareholders have been courting potential buyers since 2009, despite posting bumper financials for 2010 and being the second largest maker of DRAM chips. However, if the Hyundai deal falls through it will be the fourth time in two years.

Over here Hyundai might be best known for making forgettable cars and, even with a considerable base in the shipbuilding business, it is hard to see just what a firm that specialises in heavy industry might want with a DRAM manufacturer. According to Bloomberg, Hyundai's motivation for the purchase was to get South Korea's big companies under a family-owned conglomerate, as Hyundai Heavy and Hynix were at one point part of the Hyundai Group.

Hynix's shareholders aim to close bidding for the firm by September 2011. Ryu Jae Han, CEO of Korea Finance Corp said that any deal that's made will be closed by end the of the year.

The potential stumbling blocks for any deal could be the volatility of the DRAM market and the recurring need to upgrade fabrication plants in order to remain competitive. Hynix already outlined expenditure of 3.4 trillion won in 2011, after investing the same amount in 2010.

Whatever firm decides to pick up Hynix will certainly need deep pockets. µ