Hynix buys 9.5% of ProMOS Technologies for $168 million
Reuters
Published: June 17, 2008
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SEOUL: Hynix Semiconductor, the world's No. 2 memory chip maker, said Tuesday that it would buy about 9.5 percent of ProMOS Technologies for $168 million, expanding a strategic partnership with its Taiwan rival.
The deal is expected to strengthen Hynix's position in the market for dynamic random access memory, or DRAM, chips, used in personal computers, while giving ProMOS much-needed cash to invest in the latest chip production technology.
DRAM makers, including the biggest, Samsung Electronics, are emerging from a prolonged slump caused by oversupply and sluggish demand. But they are still under pressure to increase output at lower costs and spend more on cutting-edge technologies.
Hynix, which is based in South Korea, and ProMOS agreed in early May that Hynix would acquire a stake of up to 10 percent in ProMOS, either alone or with other financial investors in a private placement.
A Hynix spokesman said the company would buy 640 million new shares in ProMOS at 7.96 Taiwan dollars per share, a 12.6 percent premium compared to the stock's previous close. Shares in ProMOS rose 2.6 percent to 7.25 Taiwan dollars in a weaker market.
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In contrast, Hynix fell 2.5 percent, outpacing the broader market's fall.
"The deal is good news for ProMOS, and the stake price was higher than expected," said Kevin Lin, a manager at Marbo Asset Management in Taipei.
"But we'll still have to see if it will become a long-term positive factor for Hynix, since demand in techs is not that stable right now and the DRAM sector is a money burning business which should see flat growth this year," Lin said.
The deal comes as part of an expansion of an existing partnership deal under which Hynix provides technology and ProMOS manufactures DRAM chips for the South Korean company.
Hynix previously estimated it would gain more than $500 million in royalties and benefits after expanding the agreement.
Hynix said that although pricing for the ProMOS deal has been set, it has not finalized the exact timing and method of the acquisition, such as with whom it may buy the shares.
ProMOS officials were not available for comment. |
