From today's St. Louis Post Dispatch
" MEMC may be sold to a firm in Japan or Europe
By Jerri Stroud
Of The Post-Dispatch
Wafer manufacturers in Japan and Europe are the most likely buyers of MEMC Electronic Materials Co., say analysts who follow the company.
MEMC is based in O'Fallon, Mo., and employs about 6,300 people, including 2,000 in the St. Louis area.
Veba AG, the German company that owns 71 percent of MEMC, announced plans to sell the silicon wafer company along with other businesses outside its core areas of electricity generation and specialty chemical products.
Veba confirmed Monday that it plans to merge with Viag AG, another large electrical power company, in a $14 billion deal that would create the third-largest electric utility in Europe. The sale of non-core assets with about $29 billion in sales would help finance the merger.
In a statement, MEMC said it would "work closely with Veba to effectuate an orderly divestiture process that preserves and optimizes the value of MEMC." The companies have said they anticipate no immediate changes in staffing or operations in the period preceding the sale.
But MEMC is unlikely to remain as a stand-alone company, said Mark C. Jordan, an analyst with A.G. Edwards & Sons Inc. Veba has lent MEMC substantial sums, in addition to holding a 71 percent stake. With MEMC losing money and experiencing negative cash flow, the wafer manufacturer would need new investors and new financing to remain independent.
"Veba is going to want their money back," Jordan said.
Jordan said Japanese companies -- Sumitomo-Sitix, Mitsubishi Materials and Shin-Etsu Handotai (SEH), for example -- are among the likely bidders. Waker AG, another German company, is another potential bidder.
MEMC is the world's second-largest wafer manufacturer, after SEH. The other two Japanese companies and Waker round out the top five suppliers of wafers, which are the basis for silicon chips used by the semiconductor industry.
"I don't believe it would be logical or reasonable to assume that semiconductor companies would be looking" to buy MEMC, Jordan said. Most semiconductor companies have found they can save money by buying wafers on the competitive market rather than by owning their own wafer plants.
MEMC could end up selling its joint venture plants in Taiwan and other countries to its partners in those ventures. In Taiwan, MEMC has a 45 percent stake in a wafer plant in Science Park, a technology industrial park. The company's biggest partner in that plant is China Steel Corp., which owns 40 percent.
Full power should be restored to the Taiwan plant this week, said Janine Orf, an MEMC spokeswoman. The plant lost power last week when a powerful earthquake rocked the island. The plant has had only intermittent power since then, she said.
Orf said the plant suffered little structural damage from the earthquake, but some wafer products had to be destroyed after production machines lost power. Machines at the plant will have to be "tweaked" when full power is restored, Orf said, but there is no permanent damage." |
