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Micron is set to revise Elpida offer up to JPY 280bn

Might be enough to please bondholders
Tue Aug 21 2012, 11:25
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MEMORY MAKER Micron will revise its bid for DRAM outfit Elpida and pay JPY 280bn.

Micron had signed a deal with Elpida to take over the bankrupt Japanese memory maker, however Elpida's bondholders took legal action claiming the deal undervalued the firm. Now Micron is set to up its offer from JPY 200bn to JPY 280bn, still JPY 20bn lower than Elpida's bondholders believe the firm is worth.

Since Elpida's bankruptcy there has been little doubt that Micron wants to get its hands on Elpida in order to better compete with Samsung and Hynix in the DRAM market. However Elpida's bankruptcy came about through its inability to pay back billions to its bondholders and given that the DRAM industry is still in a poor state, Micron's offer for Elpida was lower than its creditors had expected.

Elpida's customers, which include Apple, will be hoping for a speedy resolution as uncertainty over Elpida will lead to DRAM price increases. Customers such as Apple have some cushion against DRAM prices as it is traded as a commodity, however as doubts persist over Elpida's future eventually prices will head up even for the largest of its customers.

Even if Elpida's bondholders are disappointed at Micron's JPY 280bn offer, at this stage it is hard to see many other firms lining up to buy the company. Both Samsung and Hynix have significant market share and either one of them purchasing Elpida could raise the attention of regulators.

Should Micron's revised offer of JPY 280bn please the bondholders, then Micron could take over Elpida in the first half of 2013. µ

 

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