Chinese company wants to buy Boise’s Micron Technology Inc. for $23 billion
BY BILL ROBERTS
broberts@idahostatesman.com July 13, 2015
A state-owned Chinese company has signaled interest in buying Boise’s Micron Technology Inc. But two U.S. analysts say the acquisition is a long shot based on a lowball offer, possible security concerns and a pile of regulations the company would have to navigate.
Tsinghua Unigroup Ltd., based in Beijing, plans to offer $23 billion for Micron, about $4 billion more than its market value Monday, according to the Wall Street Journal and Bloomberg News, citing unidentified people familiar with the matter. Tsinghua would bid $21 a share, about 19 percent more than Monday’s closing price in New York. An offer could come as early as Tuesday.
“We are very interested in cooperation with Micron,” Zhao Weiguo, Tsinghua’s chairman, told Bloomberg by phone.
The Wall Street Journal first reported the story Monday night, saying Tsinghua had submitted a bid. Micron spokesman Dan Francisco said Micron had received no such offer. The Journal then revised its story to say an offer was being prepared.
A $21 offer would not draw interest from shareholders or Micron’s board, analysts told the Idaho Statesman.
“They are not going to get it for 28 bucks a share,” predicted Mike Howard, a former Micron employee who is now a Boise semiconductor analyst with IHS iSuppli. “The long-term value is much greater.”
Micron’s shares have been battered lately. The stock closed at $17.61 on Monday, having fallen by more than 50 percent since December, with an especially sharp drop since a disappointing earnings report June 26. Shares fell 18 percent the day after the earnings report, Micron’s biggest single-day drop since December 2008.
“The proposed offer is well below what we think the company is worth,” said Betsy Van Hees, senior vice president of equity research for Wedbush Securities in San Francisco. “I see no incentive for the company to consider (the) offer.”
Howard said the U.S. government might object to a Chinese takeover. Micron is the only U.S. company manufacturing dynamic random access memory chips used in personal computers. “The U.S. needs to have a DRAM company,” he said.
If Micron were to show any interest in selling, plenty of other companies would jump in to try to buy it, he said.
Micron also sells NAND flash memory common in mobile devices and other memory chips.
The Chinese government wants to boost China’s production of memory chips, the Journal reported. Tsinghua already has ties with other American companies, including Intel, with which Micron operates a Utah chip-making factory in a joint venture. Intel paid $1.5 billion last September for a 20 percent stake in Tsinghua, Bloomberg reported. In May, Tsinghua announced it would buy a majority of Hewlett-Packard Co.’s Chinese networking gear unit H3C, the Journal reported.
Micron operates in other counties, and all of its business agreements could create a formidable mountain of regulations for Tsinghua to conquer, Van Hees said.
If completed, the deal would be the largest overseas takeover by a China-based company, according to data compiled by Bloomberg.
Tsinghua operates businesses ranging from computer chips to urban-infrastructure construction, according to a research profile on Bloomberg.com. Founded in 1988, it is a subsidiary of Tsinghua Holdings Co. Ltd.
It was not clear what form a Tsinghua offer might take. If it made a public tender offer, Tsinghua could simply advertise its interest in buying shareholders’ shares. It would be required to file its intent with the U.S. Securities and Exchange Commission. A search of the SEC’s website turned up no such filing Monday night.
Bloomberg News contributed. Bill Roberts: 377-6408; Twitter: @IDS_BillRoberts |
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