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Micron might offer US$5bn for Hynix

A South Korean investor smiles in front of the main index display board showing gains in a New Year rally at a Seoul bourse yesterday. Hynix shares have risen more than a third since news emerged Hynix and Micron were in talks for a possible tie-up. PHOTO: AFP

Micron Technology Inc may offer no more than US$5 billion for Hynix Semiconductor Inc, about two-thirds of what creditors say the third-largest computer-memory-chip maker is worth, Hynix said.

Korea Exchange Bank and other creditors are seeking US$7 billion for the debt-laden Korean company because they want enough funds to recover at least 6 trillion won (US$4.6 billion) of their loans, Hynix spokesman Kim Seung-soo said in response to a Web site report by the Korea Daily News.

The report, citing unidentified creditor and Hynix sources, said earlier today Idaho-based Micron, the second-largest memory-chip maker, will probably offer its own shares to buy Hynix and form a new company called Micron Korea. Hynix had about 8.64 trillion won of debt at the end of September. Micron's purchase may help the Korean chipmaker remain in business.

Creditor banks bailed out Hynix twice last year to avoid defaulting on Hynix debt. "The report is premature," said Sean Mahoney, a Micron spokesman.

"Talks are continuing, but there has been no offer yet made and this report is speculative."

Hynix shares recently traded at 2,965 won, up 4 percent from yesterday, after rising as much as 7 percent.

The shares have risen by more than a third since President Park Chong-sup on Dec. 3 said the two computer-memory-chip makers were in talks for a possible tie-up.

Hynix creditors said last week they expect an offer from Micron this month.

Creditors, who have the right to approve or to reject Micron's proposal, expect Micron to make an offer this month as the two companies proceed with talks after two rounds of negotiations in Seoul and in the US last month.

In 1998, Micron bought the memory-chip business of Texas Instruments Inc with 28.9 million of its own shares worth US$750 million at the time.

Both of the companies make DRAM, which provides the main memory for personal computers.

The market for the chips is forecast to have shrunk by as much as two-thirds from US$29 billion in sales in 2000 as orders from personal computer makers fell.

Hynix does not make semiconductors such as flash-memory chips, which are used in mobile phones and other portable devices and allow the storage of data even when the power is off.
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