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Micron sets a canary to watch over its stock in case of takeover

Poison pill filing sparks speculation about aggressive buy-out action

A filing in the Securities Exchange Commission has set the hounds running on speculation that Micron Technology is the latest takeover target in the ongoing consolidation of the chip business.

The filing, in the arcane language of SEC documents, gets to the point in this statement:

“[N]o person will become an Acquiring Person as a result of an acquisition of Common Stock by the Company or any of its subsidiaries which, by reducing the number of shares of Common Stock of the Company outstanding, increases the proportionate number of shares of Common Stock of the Company beneficially owned by such person to 4.99% or more (or in the case of a Grandfathered Person, increases such Grandfathered Person’s Grandfathered Percentage by 0.5% or more) of the shares of Common Stock of the Company then outstanding unless such person thereafter becomes the beneficial owner of any additional shares of Common Stock of the Company, in which case such person will be deemed to be an Acquiring Person.”

In other words, don't take a little nibble of Micron unless you can sit down for the whole meal, and if the board doesn't like you, you won't even get soup.

It amounts to a poison pill – or perhaps, since it's the tech industry, a “takeover canary”: a five per cent buy-in by someone like its biggest customer Intel would trigger a defensive rights issue.

Micron's filing explains that its concern is to protect billions worth of tax credits it holds against previous losses.

Market-watchers believe this means the company already has a specific buyer in mind. Bloomberg pings either Intel or a Chinese buyer as likely.

Earlier this month, we reported that Tsinghua Unigroup and XMC want to licence Micron's 3D NAND technology. Tsinghua was rumoured to have made a US$23 billion bid to buy the company in 2015, but nothing came of the deal.

Micron's current market value is $14.5 billion, and Bloomberg notes that the rumours surrounding the new filing drove a 6.6 per cent rise in its price. ®

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