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Micron to buy Elpida for $2.5 bn, speculation still on

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CIOL Bureau
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US/Japan: The news about Elpida’s acquisition seems to be quite sketchy. As it seems to be a high risk high reward acquisition for Micron, the US based chip maker has reportedly struck a deal of $2.5 billion for bankrupt Japanese based DRAM vendor, Elpida.

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According to a report by Japan’s Nikkei newspaper, about 140 billion yen (about $1.75 billion) of the acquisition price will go to pay off Elpida's debt. About 70 per cent of Elpida's outstanding debt, totaling about 420 billion yen (more than $5.2 billion) won't be repaid.

The acquisition could bring in a lot more investment on Elpida by Micron which is being speculated as the acquiring company. As per an analyst of Barclays Capital, C.J.Muse, ''the actual purchase price Micron will reportedly pay for Elpida is roughly the $1.75 billion that will go toward Elpida creditors. The remainder, about 60 billion yen ($755.5 million), will go toward investments to upgrade Elpida's production facilities.''

Muse said the price tag of $1.75 billion is more or less in line with Barclays' initial estimate of $1.75 billion to $2 billion that Micron would pay for Elpida, reports Dylan McGrath of Eetimes.

Inorder to maximize output, Micron plans to invest about 100 billion yen ($1.26 billion) in Elpida's fabs, including Elpida's flagship fab in Hiroshima prefecture, as per the Nikkei report. The report also says that, Elpida is due to finalize its business rehabilitation plan and submit it to the Tokyo District Court by Aug. 21.

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