China's state-backed Tsinghua Unigroup Ltd is preparing a $23 billion bid for U.S. memory chip maker Micron Technology Inc (MU.O), in what would be the biggest Chinese takeover of a U.S. company, people familiar with the matter said.
Jul 14, 2015
The technology conglomerate is prepared to bid $21 per share for Micron, a 19.3 percent premium to the stock's close on Monday. The offer could come as early as Wednesday, a person close to Tsinghua told Reuters, although a Micron spokesman said it had not received an offer.
A successful bid would consolidate Tsinghua Unigroup's position as a champion for China's technology development, after it struck deals and research partnerships with international firms in the semiconductor industry.
The company is controlled by Tsinghua University in Beijing, which counts President Xi Jinping among its alumni, and is backed by China's central government.
China has attached strategic importance to the development of domestic semiconductor, server and networking equipment industries amid fears of foreign cyberspying.
But any foreign takeover of Idaho-based Micron - the last major U.S.-based manufacturer of DRAM chips used in personal computers - would likely have to pass a review by the Committee on Foreign Investment in the United States, which looks at the national security implications of such deals.
Vincent Gu, a Shanghai-based analyst at iSupply, said the chances of the U.S. government approving the deal would be "next to zero" given the political hurdles. "It's difficult to purchase the critical technology. China should stay firmly grounded and persevere with researching the technology itself," Gu said.
Micron makes both dynamic random access memory (DRAM) chips and NAND memory chips for storing music, pictures and other data on smartphones, cameras and other mobile devices.
Acquiring Micron's cutting-edge memory manufacturing technology would be a major advance for China's modest but improving chip industry headed by Tsinghua Unigroup.
With roots as a private equity fund, Tsinghua Unigroup transformed into a serious semiconductor player after it bought Chinese chipmakers RDA Microelectronics and Spreadtrum in deals totalling $1.6 billion last year. When Tsinghua Unigroup received a $1.5 billion investment from Intel Corp (INTC.O) in October, the two sides pledged to cooperate on research and further Chinese technology.
The Wall Street Journal first reported early on Tuesday that Tsinghua Unigroup was prepared to submit a bid, citing people familiar with the matter.
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