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Hynix, Micron close to $4 billion sale.

Byline: CHRISTIAN WIHTOL Register-Guard Business Editor

The on-again, off-again, on-again, off-again courtship between Hynix Semiconductor Inc. and Micron Technology Inc. appears to be on again.

Hynix CEO Park Chong Sup says he's close to an agreement to sell his company's memory-chip business to Micron Technology Inc. for about $4 billion, South Korea's Yonhap News reported Wednesday.

Hynix's memory-chip business includes six memory chip plants in South Korea, plus the company's plant in west Eugene, which Hynix recently upgraded to make 256-megabit dynamic random access memory chips.

Micron spokesman Sean Mahoney at Micron's headquarters in Boise, Idaho, declined to comment, except to say talks with Hynix are ongoing.

The $4 billion price now being mentioned appears to be a compromise between the $5 billion that Hynix was seeking and the roughly $3.2 billion that Micron was offering.

The combination would create the world's largest DRAM producer, surpassing Samsung Electronics Co.

However, it remains unclear whether Hynix will formally go ahead with the sale. Hynix's creditor banks control the fate of the company and their approval is needed, the Yonhap report noted. Hynix owes creditor banks about $6 billion. The banks would benefit from an asset sale, and thus are pressing for as high a price as possible, analysts say.

Some investors doubt the deal will go through.

"`There's a less-than-50-percent chance a deal will get done,'' said John Rutledge, manager of the Evergreen Technology Fund, which holds $400,000 in Micron stock.

Micron wants Hynix only if the purchase will lower Micron's production costs, which isn't certain because most of Hynix's plants are relatively old, Rutledge said.

``Micron would just as soon have Hynix sink into the sunset,'' said Rutledge, who doesn't favor Micron buying the business. ``As an investor, I'm against it.''

Meanwhile, Munich, Germany-based Infineon Technologies on Wednesday said talks have ended with Hynix about combining their memory-chip businesses. When talks between Micron and Hynix were on the rocks last month, Hynix said it had begun talking with Infineon. At the time, some analysts said that move was a negotiating ploy by Hynix to put pressure on Micron. Other analysts have said Micron has kept pursuing Hynix in an effort to keep Hynix out of Infineon's hands.

Hynix's Park returned to Korea this week from negotiations in San Francisco with Micron, Yonhap said. Both chipmakers have ``effectively agreed,'' on the purchase price, Yonhap quoted Park as saying. That Park would make a public statement about the negotiations was viewed by some observers as significant. In the past, Park has typically made no statements, and Hynix has let its views be known almost exclusively through anonymous leaks to the Korean media.

It is uncertain what effect a sale would have on the Eugene plant, but analysts said they expect Micron would keep the facility operating. The recent upgrade means the plant is now producing a grade of chip that is the industry's emerging new standard.

- Bloomberg News

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Title Annotation:Technology: If approved, the deal would create the world's largest DRAM producer.; Business
Publication:The Register-Guard (Eugene, OR)
Geographic Code:1USA
Date:Feb 14, 2002
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