Micron Entertains $23 Billion Buyout From China's Tsinghua Unigroup
Tsinghua Unigroup Ltd., a Chinese state-owned semiconductor design firm, is reportedly making a play to acquire Micron Technology Inc. for $23 billion. Should the transaction ultimately happen, there would be no more U.S. memory makers left standing. However, there are several hurdles that stand in the way of the transaction, including the purchase price.
Citing people familiar with the matter, The Wall Street Journal says Tsinghua Unigroup is trying to acquire Micron for $21 per share. That represents a more than 19 percent premium over Micron's stock price at the time the story broke, and though that seems attractive at a glance, it's also around 21 percent below Micron's 100-day moving average of $26.61. It's even worse if you look at the 200-day moving average, which is $29.50.
That's just one hurdle. Even if Micron decided to accept the offer -- and it's not clear if an official offer has even been made -- there are security concerns. According to Reuters, the U.S. Department of Defense might not be so keen on Micron selling its assets to China, as it could present a threat to national security.
The reason? Micron is a major supplier of DRAM and NAND flash memory chips. Today's weapons technology is heavily reliant on computer chips, so a deal like this involving China, which has been linked to U.S. cyberattacks, would face certain scrutiny.
"This seems highly unlikely, just given the technology that's involved. This is a massive deal, really important technology and quite frankly, it's the Chinese," said Reed Smith, a partner at Leigh Hansson who heads the firm's International Trade & National Security practice.
It's not an impossible deal to make. Tsinghua Unigroup already has ties to U.S. chip technology, as it formed a partnership with Intel last year to jointly develop mobile technology.
Citing people familiar with the matter, The Wall Street Journal says Tsinghua Unigroup is trying to acquire Micron for $21 per share. That represents a more than 19 percent premium over Micron's stock price at the time the story broke, and though that seems attractive at a glance, it's also around 21 percent below Micron's 100-day moving average of $26.61. It's even worse if you look at the 200-day moving average, which is $29.50.
That's just one hurdle. Even if Micron decided to accept the offer -- and it's not clear if an official offer has even been made -- there are security concerns. According to Reuters, the U.S. Department of Defense might not be so keen on Micron selling its assets to China, as it could present a threat to national security.
The reason? Micron is a major supplier of DRAM and NAND flash memory chips. Today's weapons technology is heavily reliant on computer chips, so a deal like this involving China, which has been linked to U.S. cyberattacks, would face certain scrutiny.
"This seems highly unlikely, just given the technology that's involved. This is a massive deal, really important technology and quite frankly, it's the Chinese," said Reed Smith, a partner at Leigh Hansson who heads the firm's International Trade & National Security practice.
It's not an impossible deal to make. Tsinghua Unigroup already has ties to U.S. chip technology, as it formed a partnership with Intel last year to jointly develop mobile technology.
