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Technology Stocks : Micron Only Forum -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (43004)	2/13/1999 12:02:00 PM
From: DJBEINO	Respond to of 53903

Hyundai, LG still divided Jack Robertson The Hyundai Group and the LG Group last week again failed to meet a government-imposed deadline to complete the merger of their semiconductor businesses, and set a new target of Feb. 28 to come to terms. Officials of the two chaebol said both are still sharply divided over the price that Hyundai Electronics Industries Co. Ltd. should pay for LG Semicon Co. Ltd. Neither company would comment on specific prices, but sources said LG is asking for up to $4 billion, while Hyundai is offering half that figure. After the companies missed two previous deadlines to conclude the deal, Korea's Financial Supervisory Commission last week insisted the two sides agree on a price by Feb. 28 and sign an acquisition contract by March 7. An earlier roadblock to the acquisition was removed last week when striking workers at LG Semicon, Seoul, Korea, ended a 15-day walkout staged to protest the sale. They returned to their jobs after LG agreed to pay a six-month wage bonus in return for the workers accepting the transfer to Hyundai Electronics, based in Ichon, Korea. LG production in Korea was restarted, although analysts estimated it could take weeks to requalify lines and return to high yields. An internal LG Group document obtained by EBN charges that Hyundai "is taking advantage of Korean government policy to avoid paying a reasonable price" for LG Semicon. The LG paper notes that the stock price of major rival Micron Technology Inc. has more than doubled in the last six months. The document states that this reflects the strengthening of the global DRAM market and its potential for recovery this year. "Micron is the only truly comparable company with similar size as LG Semicon," the company says in the document. "Historically, LG Semicon sales and profits have been comparable to Micron, and therefore the Hyundai purchase price for LG should reflect a similar stock jump as for the Micron shares." LG also argues that mergers in the United States traditionally involve a premium price. "In 1997-1998 in the U.S., there were 40 mergers in which companies received a premium of 200% to 2,000% over the share price of the company," the document states. LG concedes that unstable Korean financial conditions might make LG Semicon's stock a little less valuable than Micron's share price. "But no more than a 20% discount," the company says in the document. In the next two weeks, LG's and Hyundai's U.S. investment advisers will try to come up with an agreeable purchase price for both companies. LG has retained Goldman Sachs Group LP and Lehman Brothers Inc., while Hyundai is using Merrill Lynch & Co. Inc. If the two chaebol still can't agree on a purchase price based on the recommendations of their respective advisers, the government has threatened to form its own advisory group to set the price. The government last fall enlisted the help of Arthur D. Little Inc., a U.S. management consulting firm, which selected Hyundai to take control of LG Semicon. LG is demanding that the purchase be in the form of a cash payment. That would give the once-debt-straddled chaebol cash with which to put its financial house in order and reinvest in its business lines. Depending on how Hyundai finances the purchase, the electronics entity could end up with more than $10 billion in debt. The battle between Hyundai and LG has continued to create uncertainty about pricing and capacity in the global DRAM market. Steven Gee, an analyst with Morgan Stanley Dean Witter & Co. in Hong Kong, estimated that the strike at LG would reduce the global DRAM supply by 6% in the first quarter. But analyst Clark Fuhs of Dataquest Inc., San Jose, believes there is still enough excess capacity in the industry to pick up the slack caused by the loss of LG output. Copyright ® 1999 CMP Media Inc. techweb.com