Micron Gets Pushback on Deal for Elpida

Earlier this month Micron Technology Inc. (NASDAQ: MU) was named the top bidder in the auction for bankrupt Japanese DRAM maker Elpida Memory. Now, it seems that some creditors think that Micron’s $2.5 billion bid is too low and they are seeking another buyer.

A report at Reuters names South Korea’s SK Hynix and US chip maker GlobalFoundries as two firms the unhappy bondholders have begun discussions with. At the time that Micron was declared the winning bidder, the only other competitor was a combined bid from two Japanese private equity firms.

If a couple of private equity firms think that Elpida is worth less than Micron thinks it’s worth, then it doesn’t make a lot of sense to believe that either Hynix or GlobalFoundries will think Elpida is worth more. Elpida’s debt is more than double the price Micron has offered to pay, so it’s no surprise that the bondholders want to smoke out a higher bid. At best they’re probably hoping to get another bid that is slightly better than Micron’s in the hope that Micron will bid again. Another possibility is that one of the private equity firms will take part with one of the chip makers, lowering the amount of capital at risk, but likely to muddy the waters over who’s in charge and what the strategy should be going forward.

Micron’s shares are up 0.8% in the pre-market, at $5.67 in a 52-week range of $3.97-$10.23.

Paul Ausick