Is Micron Getting Acquired For $23 billion By Tsinghua Unigroup
Tsinghua Unigroup, a Chinese firm company is ready to take over American memory chip maker Micron for $23 billion USD. According to statistical data, if the deal goes through, then it will be the largest foreign takeover by a Chinese firm. Tsinghua Unigroup happens to be China’s largest chip design company, and is prepared to give $21 a share for Micron, which happens to be a 19.3 percent more than its current stock price (which is standing it at $17.61 on Monday’s closing price). Micron shares, which are listed on NASDAQ, have fallen by nearly half in the past year. The offer that the Chinese firm is offering to the American firm is definitely worth looking in to.
Tsinghua Unigroups’ Acquisition Of Micron Will Give China Access To The Company’s Cutting Edge Memory Manufacturing Tech
According to a report from Bloomberg, a Micron spokesman has stated that the company currently has not received a buyout offer and has declined to comment any further. As always, the acquisition of an American firm will definitely be facing a strict level of scrutiny by U.S. officials in Washington. CFIUS (Committee on Foreign Investments in the United States), will most likely be spearheading this operation, since the organization is charged with determining whether or not any foreign acquisitions or investments pose a security threat to the United States.
If CFIUS ends up deciding that the acquisition deal can pose a threat to the country, then the transaction can immediately be blocked. Majority of foreign companies that have received a negative feedback from CFIUS end up dropping the transaction on their own. However, if the deal does manage to be successful, then it will overshadow all the previous Chinese takeovers of U.S. firms. Currently, Chinese meat processor Shuanghui International’s $7.1 billion takeover of Smithfield Foods in the year 2013 was the highest record achieved so far.
What Will Tsinghua Unigroup Have To Gain From Acquiring Micron?
China’s dominance in the smartphone industry is slowly being recognized but it has not been able to create a significant market when memory chips are concerned. This acquisition will change everything for the Chinese. If successful in the transaction, it would give China the world’s fifth largest chipmaker by revenue. Micron is currently competing with the likes of Samsung and SK Hynix, and has state of the art manufacturing facilities present in United States, Japan as well as Singapore.
Micron is currently behind Samsung, which happens to be world’s largest memory maker in the world. At this current point, China has no major memory manufacturing firms, which explains why the acquisition offer came through in the first place. While Micron has a very long way to go, Billionaire hedge fund manager David Einhorn has stated that Micron would be worth more than Netflix, which is currently valued at $42.9 billion at the close on Monday.
While the Chinese will gain a significant piece of the memory market share, the U.S. government still stands in the way of this transaction. What do you guys think? Will Tsinghua Unigroup successfully be able to acquire Micron, or will external powers prevent this from happening. Let us know your thoughts.