Micron Makes Acquisitions
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Micron Technology (NASDAQ: MU) has agreed to buy troubled Japanese rival Elpida Memory Inc. through an agreement that will see the chipmaker spend about $2.5 billion to buy the company’s equity and pay some of its creditors. Micron became Elpida’s financial sponsor in May after the company filed for bankruptcy protection. Micron will acquire the company’s equity for $750 million and pay a total of $1.75 billion in future annual installment payments. All pre-petition debt obligations of Elpida will be discharged under the corporate reorganization proceedings. The agreement also calls for Micron to provide certain financing support for Elpida capital spending and to maintain the company’s operations and employees. Micron Technology has also agreed to acquire Taiwan-based Powerchip Technology Corporation’s 24% interest of Rexchip Electronics Corporation for around $334 million, meaning that Micron will now control approximately 89% of Rexchip’s outstanding shares.
Micron is one of the world’s leading semiconductor companies. Their DRAM, NAND, and NOR flash memory products are used in everything from computing, networking, and server applications, to mobile, embedded, consumer, automotive, and industrial designs. Though Micron Technology is considered the leader in its class, some of its smaller peers include competitors such as Spansion (NYSE: CODE) and Rambus (NASDAQ: RMBS).
Spansion, like Micron, provides flash memory technology. The company’s products power everything from the routers that run the internet to the highly interactive and immersive consumer and automotive electronics that are enriching people’s daily lives. Their broad and differentiated flash memory product, charge trapping technology, and service and support enable customers to achieve greater efficiency and success in their target markets. Spansion currently has over 3,900 products and over 6,800 customers worldwide. Still, with 2011 net sales of $1.1 billion their market share is only a fraction of Micron’s.
Rambus also provides memory products to customers. This company focuses on the development of technologies that enrich the end-user experience of electronic systems. Rambus has offices in the U.S., India, Germany, Japan, Korea, and Taiwan. Similar to Spansion, Rambus’ market share is only a fraction of Micron’s. Though Spansion and Rambus are both great companies, as Micron Technology continues to acquire and expand, it will be harder for them to keep up and compete; it is a growing company with vast potential.
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