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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (54203)	4/22/2002 10:55:33 AM
From: Softechie	Respond to of 99280

Now we're talking my friend...

To: Zeev Hed who wrote (54203)	4/22/2002 10:55:42 AM
From: Doug Shapiro	Read Replies (3) \| Respond to of 99280

Micron Agrees to Buy Chipmaker Hynix for $4 Billion Zeev looks like a slam dunk for 35 on MU (Update9) By Ian King and Heejin Koo Boise, Idaho, April 22 (Bloomberg) -- Micron Technology Inc. agreed to buy most of South Korean rival Hynix Semiconductor Inc. for $4 billion in cash and stock, forming the world's biggest memory-chip maker as the industry recovers from its worst year. Ending five months of talks, Micron agreed to pay about 108.6 million common shares for Hynix's memory-chip assets and $200 million for a 15 percent stake in divisions that make other types of semiconductors, Micron said in a statement. The purchase will increase Micron's share of the $11 billion memory-chip industry to more than 33 percent. Memory-chip prices fell more than 80 percent last year, before tripling since November. The Hynix deal is South Korea's largest direct international investment. South Korea's government is trying to slash corporate debt and open industries to foreigners. ``The semiconductor industry is changing into a seller's market,'' said Kim Woo Sik, who manages 300 billion won ($229 million) at Daehan Investment Trust Management Co. in Seoul. The sale also will signal to foreign investors ``that Korea's reforms are on track,'' he said. Shares of Micron rose 11 cents to $29.61 in early trading. Hynix fell as much as 11 percent because investors are concerned that they will be left with little after the sale. The stock, down 50 percent this year, fell 6.75 percent to 1175 won. Micron guaranteed that its shares will be valued at $35 each when the transaction is completed, 19 percent above Friday's closing price, valuing the stock portion of the purchase at $3.8 billion, said Song Joo Kyung, a credit official at Korea Exchange Bank, a Micron lender. Micron shares have traded at an average price of $33.79 this year. Hynix Debt Hynix and Micron plan to reach a final contract by the end of May, said Lee Duk Hoon, chief executive officer of Hanvit Bank, who negotiated today's agreement on behalf of other creditor banks. Hynix owes 6.5 trillion won ($4.9 billion) after two multibillion-dollar bailouts last year. Buying Hynix would let Boise, Idaho-based Micron overtake Samsung Electronics Co. as the world's largest producer of dynamic random-access memory chips. The U.S. company also will borrow $1.5 billion for from Korean banks. Micron had a 19 percent market share last year behind Samsung's 27 percent, according to researcher Gartner Dataquest. Hynix had 14.5 percent of the market for DRAMs, the main memory chips in personal computers. Other Acquisitions Micron's other acquisitions have included Texas Instruments Inc.'s memory-chip business in 1998 and Toshiba Corp.'s memory- chip business in the U.S. in December. Creditors such as Hanvit and Korea Exchange Bank have first call on the company's assets after the bailouts last year, when Hynix had a 5 trillion-won loss. Hynix earned 35 billion won in the first quarter, its first profit since late 2000 as chip prices began to rise. Micron has had five straight quarterly losses. The South Korean bankers said they're trying to ensure the company's survival -- not just recover the loans. ``Providing a return for creditors was less important that guaranteeing a future for the company,'' said Hanvit's Lee. Hynix has about 15,000 employees and provides about 4 percent of Korea's exports. Creditor Impact The banks will have to decide how they will distribute the shares, which equal about 18 percent of Micron's current total. Banks may have to report more losses related to Hynix debt, analysts said. ``They are still under obligation to extend loans to Micron, meaning each of them has to set aside hundreds of billions of won of provisions,'' said Bryan Song, a banking analyst at Merrill Lynch & Co. Micron didn't guarantee the new loans that the South Korean unit will use to upgrade plants, South Korean creditors said. The chipmaker did offer to guarantee 85 percent of its jobs for the next two years.