WSJ: China's Tsinghua Unigroup Makes $23 Bln Bid For Micron Technology

(RTTNews) - China's largest state-owned chip maker Tsinghua Unigroup Ltd. has made a $23 billion bid to buy U.S. memory chip maker Micron Technology Inc. (MU), the Wall Street Journal reported Monday, citing people familiar with the matter.

According to the WSJ report, Tsinghua Unigroup has offered to acquire Micron Technology for $21 per share, representing a 19.3 percent premium to Micron's closing stock price of $17.61 on Monday. Tsinghua Unigroup has reportedly presented a letter to Micron, outlining its bid.

If the deal materializes, it would be the largest takeover of a foreign company by a Chinese firm. It would also be the largest Chinese acquisition of a U.S. company. The previous record was Smithfield Foods Inc.'s $7.1 billion takeover by Chinese meat processor Shuanghui International Holdings Ltd. in 2013.

China, which is weak in memory chips, is making a push to advance its own chip sector by building more domestic sources of semiconductors. Semiconductors are important for consumer products like smartphones as well as equipment used for defense purposes.

Tsinghua Unigroup was founded in 1988 by China's Tsinghua University. In May 2015, Tsinghua acquired a controlling stake in Hewlett-Packard Co.'s (HPQ) China networking equipment unit for about $2.3 billion. In September 2014, Intel Corp. (INTC) said it will buy a 20 percent stake in Tsinghua Unigroup for $1.5 billion.

According to the WSJ report, Boise, Idaho-based Micron Technology makes a large portion of its chips in U.S. factories, but has large wafer-fabrication facilities in Asian countries such as Singapore and Taiwan. The company also has an assembly factory in mainland China.

Micron Technology is known for its memory chips such as DRAM, NAND and NOR Flash that are used in computers. It also makes memory chips for smartphones, as well as solid-state drives. While historically Micron Technology has been DRAM-oriented, pricing pressures has made it to expand its product portfolio.

In late June, Micron Technology reported a plunge in profit for the third quarter from the prior year, hurt largely by weak demand and pricing pressures due to softness in the personal computer sector as well as on one-time expenses. The company also provided weak revenue outlook for the fourth quarter, indicating the challenges it continues to face.

The semiconductor industry is seeing a wave of consolidation as chip makers grapple with rising costs and weak revenue growth. In June, Intel said it will buy programmable chip maker Altera Corp. (ALTR) for about $16.7 billion in cash.

Mixed signal solutions provider NXP Semiconductors N.V. (NXPI) said in March that it has agreed to buy embedded processing solutions provider Freescale Semiconductor Ltd (FSL) for about $16.7 billion in cash and stock.

Avago Technologies Ltd. (AVGO) said in May that it will acquire Broadcom Corp. (BRCM) for $37 billion in cash and stock.

MU closed Monday's trading at $17.61, up $0.04 or 0.23 percent on a volume of 35.79 million shares.