Hynix and Micron agree to agree

Headline price -$3.4bn

Hynix is worth $3.4bn upfront in shares to Micron, according to today's news that the two have reached a preliminary agreement. This will see the debt stricken Korean DRAM maker get Micron as its new sugar daddy.

The deal is preliminary - the two firms have signed a 'non-binding memorandum of understanding', and the package agreed between the two is $3.6bn in total, $200m less than the last price suggested by Micron. So the deal could still be scuppered if, say, Micron's share price collapses.

Also, Micron could still simply pick up its bags and walk away. This scenario is unlikely considering the level of emotional investment the US DRAM manufacturer has committed into making this acquisition happen.

Under the MOU, Micron will also invest $200m for a 15 per cent stake in Hynix's non-memory operations. This is a sop to creditors, by and large Korean banks, which will take a hit to the tune of $3bn for their Hynix support. The banks will provide Micron with long term debt facilities of $1.5bn to support its Korean ops.

According to reports, Hynix creditors expect the deal to complete by the end of May. Micron has agreed to employ at least 85 per cent of Hynix's workforce for two years, a politically astute committment for a foreign company operating in highly nationalistic Korea. ®