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Deal is expected to close next year

Micron and Elpida have announced they have signed a sponsor agreement that will see the former acquire the latter. The agreement has been entered into in connection with Elpida's corporate reorganization proceedings and are being conducted under the jurisdiction of the Tokyo District Court. The complete value of the deal is $2.5 billion minus some reorganization proceeding expenses.
 
Some of those expenses will be used to pay reorganization claims of secured and unsecured creditors of Elpida. For the expenditure, Micron will acquire 100% of Elpida with $750 million of the total purchase price being paid in cash at closing. The additional $1.75 billion will be paid in annual installment payments through 2019. The money for those installment payments will be paid from cash flow generated from Micron's payment for foundry services provided by Elpida as a Micron subsidiary.
 
"We are creating the industry-leading pure-play memory company," said Micron CEO Mark Durcan. "Today's transactions will help strengthen the combined companies' market position in the memory industry through increased research and development and manufacturing scale; improved access to core memory market segments; and additional wafer capacity to balance among DRAM, NAND and NOR memory solutions for the ultimate benefit of Micron and Elpida customers."
 
The purchase agreement between the two companies also requires that Micron will provide financing support for Elpida capital expenditures under certain conditions and to maintain operations and employees of the company. Assets that Elpida holds that Micron is gaining include a 300 mm DRAM production facility in Hiroshima, Japan and 65% ownership interest in a company called Rexchip. Rexchip also has a 300 mm DRAM fabrication facility in Taiwan. Micron already owns a stake in Rexchip and the purchase will give it 89% of Rexchip overall.
 
Yahoo reports that Elpida has been seeking to reorganize after years of chip prices plummeting and an oversupply on the market. The deal is expected to close in the first half of 2013. 

Sources: Micron, Yahoo News





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