China's Tsinghua makes $23bn bid for Micron

Jul 14, 2015, 4:02 PM EDT
US semiconductor giant Micron Technology chief executive Mark Durcan (R) and president Mark Adams at announcement of the acquisition of Japan's one and only DRAM maker Elpida Momory, which filed for bankruptcy protection to the court last year, at a press conference in Tokyo on July 31, 2013.

China's Tsinghua made a  $23 billion bid for U.S. firm Micron Technology, according to people familiar with the matter. Tsinghua Unigroup Ltd., China’s largest chip design company, is willing to pay $21 a share for Micron, a 19.3% premium over its Monday closing price, one of the people said, according the Wall Street Journal. Shares of Nasdaq-listed Micron have fallen by nearly half in the past year. They closed at $17.61 on Monday. 

Any deal would likely face close scrutiny by U.S. officials in Washington. One question is whether it would be reviewed by the Committee on Foreign Investments in the United States, a panel of representatives from more than a dozen departments and agencies across the U.S. government.CFIUS, as the group is known, is charged with determining whether any foreign acquisitions or investments pose a security threat. But the process for determining whether a transaction is subject to CIFIUS review isn’t clear-cut. In many cases, firms involved with a transaction that might raise security concerns are expected to notify the committee, which is chaired by the Treasury Department, and that kicks off a review. However, in some cases, when a transaction isn’t referred to the government by the companies involved, government officials can choose to launch an inquiry of their own.

As semiconductor makers consolidate in the face of rising costs and shrinking customer pools, the proposed Micron acquisition would extend the record year the industry’s having for deals, including Avago Technologies Ltd.’s agreement in May to pay about $37 billion for Broadcom Corp, notes Bloomberg.

Micron on June 26 reported its first revenue decline in more than two years on weakening demand for its dynamic random access memory, or DRAM, chips used in PCs. The company is expanding its offerings to include memory for smartphones and servers and another type of chips used as storage in mobile devices and computers.