Micron Offers to Acquire Elpida for About $1.5 Billion

While Toshiba and Globalfoundries were believed to have participated in the bidding process, it seems as if Micron is ready to pay somewhere between $1.3 billion and $1.5 billion for its rival.

The value of Elpida is mainly in its Hiroshima manufacturing facility, which is estimated to be worth about $1 billion, according to a Bloomberg article. Building a new fab is substantially more expensive for every chip maker. As of March 2012, Micron's balance sheet lists about $2.1 billion available in cash and short term investments. However, the company's quarter results have worsened since the end of 2010 and dipped into the red into the most recent quarter when the company reported a net loss of $224 million on revenues of $2.1 billion.

Recently appointed chief executive officer Mark Durcan said that the company expects DRAM prices to recover, but explained that even if the company has been able to sell more NAND Flash and DRAM in the last quarter, the greater volume was offset by lower average selling prices. Increased manufacturing capacity and cost improvements could be one way for Micron to protect itself in the future from downturns in the market. Micron recently made a similar move when it acquired Intel's shares in the flash memory joint-venture IM Flash.