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SK hynix in initial Elpida bid; Micron, Toshiba circling
March 30, 2012 / 10:30 AM / 5 years ago

SK hynix in initial Elpida bid; Micron, Toshiba circling

TOKYO/SEOUL (Reuters) - South Korea’s SK hynix (000660.KS) said on Friday it has made a preliminary bid for Japan’s Elpida Memory, while sources said U.S.-based Micron Technology (MU.O) also plans to enter the fray for taking over the bankrupt memory chipmaker.

With sources saying Toshiba Corp (6502.T) too is considering bidding for Elpida, a three-way contest is looming for the Japanese company which last month made the nation’s biggest ever bankruptcy filing by a manufacturer after failing to secure a rescue from other chipmakers.

SK hynix said it had submitted its initial interest for the bid on Friday, the first deadline for a bid proposal, adding it would decide whether to make a formal bid after conducting due diligence.

Several sources with knowledge of the matter told Reuters that Toshiba was considering joining the bidding to take on Samsung Electronics Co (005930.KS), the world’s top maker of DRAMs, but that it was reluctant to take on all of Elpida’s assets.

Toshiba may consider a joint bid with another company, they said, in a move that would make it easier to gain government-backed funding and help cushion the risk. Toshiba wants to avoid exposing itself further to the fluctuations and capital spending requirements of the chip market.

Meanwhile, sources told Reuters that Micron plans to submit a bid, and that Goldman Sachs (GS.N) is acting as its financial adviser.

Japan’s Nikkei daily had initially reported that Toshiba had decided to join the bidding. Toshiba declined to confirm the report, while Micron could not be immediately reached for comment.

Toshiba believes that adding Elpida’s cell-phone-use DRAMs to its offerings is crucial for its survival in the chip industry, and may seek financial assistance from the government-backed Enterprise Turnaround Initiative Corp of Japan, the Nikkei said.

TOSHIBA EDGE SEEN

SK hynix’s shares ended down 4.1 percent on Friday in a flat Korean market before its announcement.

“I think news that Toshiba is in the bidding was adding more pressure to falling shares in Hynix,” said Daewoo Securities analyst James Song. “If Hynix takes over Elpida on the cheap, nothing will be better than this because it takes out a potential competitor.”

Song added, however, that he believed Toshiba was more likely to win because the government is said to prefer a Japanese company to be Elpida’s sponsor.

Elpida filed for protection from creditors last month with 448 billion yen ($5.45 billion) in debt.

It will soon stop accepting applications for the first round of bidding, the Nikkei newspaper said. After the second round at the end of April, a single sponsor will be selected in early May, the paper added.

Though other firms such as Intel Corp (INTC.O) and Taiwan’s Formosa Plastics Group - the parent of Nanya Technology Corp (2408.TW) - may join the fray, Toshiba and Micron are likely to become leading contenders, the business daily said.

The Korean company’s move comes just after it officially launched as SK hynix this week following a takeover of a majority stake in Hynix by cash-rich SK Telecom Co (017670.KS). Hynix’s chief executive said earlier this month the company was not interested in Elpida.

Toshiba shares ended down 1.9 percent, underperforming a 0.4 percent decline in the broader Tokyo market.

($1 = 82.2550 Japanese yen)

Additional reporting by Ju-min Park, Mayumi Negishi, James Topham and Taro Fuse; Writing by Chang-Ran Kim; Editing by Muralikumar Anantharaman and Himani Sarkar

Our Standards:The Thomson Reuters Trust Principles.
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