jeudi 23 juillet 2015
Micron’s decision to discourage a buyout offer from China’s Unigroup
A week after the screening in the titles, a potential offer by Tsinghua Unigroup China to Micron Technology (NASDAQ: MU) is in doubt, with the word that the main US memory chip maker is worried that such an agreement Washington could get a veto over national security reasons. The development comes as a slight surprise to me, as I have already predicted that such an agreement would ignite some controversy, but would eventually be approved by the Committee on Foreign Investment in the US (CFIUS) which conducts examinations for national security risks.
It is quite possible that Micron does not really proceed to negotiations because it believes that there is a fairly high chance that such an agreement could be vetoed by Washington. But that said, it is also quite possible that Micron could quickly resume talks if Unigroup offers a higher price than the previous $ 21 per share under discussion, and that all this is just a negotiating tactic.
This particular saga began a week ago, when the media reported that Unigroup, a company with close ties to Beijing, was preparing to make his offer $ 21 per share for Micron, in a deal that would value the chip maker to 23 billion. (Previous Post) Some argued the deal would get vetoed because of the status of Micron as the first memory chip maker United States and its broad portfolio of know-how high-tech. But others said the Micron technology is widely available around the world, making a less likely veto.
The latest reports now say that Micron said quietly Unigroup he will not pursue a case, due to the probability of a veto by CFIUS. (Article in English) Micron delivered its views after UniGroup officials expressed their formal interest in pursuing an acquisition late last week, say reports. They added that Micron consulted but not hired an investment bank because it does not want to pursue a case.
As a former journalist, I can say with almost 100 percent confidence that this news comes from particular sources at Micron, which means that the leak was almost certainly a strategic decision with additional incentives. This could mean that simply said Micron Unigroup its $ 21 offering price is too low, and he will need to significantly increase the number of Micron to go to the trouble to pursue a case that has a significant risk of being rejected.
Certainly investors do not see things this way, with the shares of Micron tumbling 6 percent in the last trading session at $ 18.89, or 10 percent below the expected offering price. The shares had risen as high as $ 20.12 after the news was reported last week. But it is also interesting to note that shares of Micron lost about half its value in the last 7 months due to the stiff competition in the memory market from the computer that is used to power most Electronic devices today.
This rebuff Micron means that the ball is now in the Unigroup camp, and Chinese society will have to decide to come back with a substantially higher offer, perhaps around $ 30 per share. This would mean Unigroup would have to pay much more for Micron, well over $ 30 billion for a deal that could not even get approved.
If this were a rational position, market-oriented, I would say Unigroup would abandon the offer and that would be the end of history. But in this case, I truly believe that the political forces are involved and Unigroup is being strongly supported by the central government. China is already the largest purchaser of memory chips and Beijing is desperate to become a global player in the market of the chip. Therefore, I predict that Unigroup will return with an offer much higher soon, perhaps in 1-2 weeks, and that the two sides will resume talks in this regard. It's quite possible, Micron That Does not really want to proceed with talks Because It Believes there's a big enough opportunity That Could Get Such a deal vetoed in Washington. Purpose That Said, it's quite possible to aussi That Could Quickly Micron summary offers the talks if Unigroup A Higher price than the previous $ 21 per share Discussed being white, and That all of this is just a bargaining tactic. This Particular saga Began a week ago, When media reported about That Unigroup, a company with close ties to Beijing, Was prepaid icts to make $ 21-per-share bid for Micron, in a deal That Would the chipmaker value at $ 23 billion. (Previous post) Some argued the deal Would get vetoed due to Micron's status as the leading US Memory chip maker and Its broad portfolio of high-tech know-how. Others aim Said Micron's technology is available Widely Throughout the world, making a veto less Likely. The latest reports now Say That Micron HAS quietly Told Unigroup It Does not want to Pursue a deal, due to the probability of a veto by CFIUS. (English article) Micron Delivered icts view After Unigroup Officials Expressed Their formal interest in Pursuing an acquisition late last week, the reports say. They add Micron That HAS Consulted but not hired an investment bank Because It Does not want to Pursue a deal. As to form reporter, I can say with 100 percent confidence Almost Particular That this news is coming from sources at Micron, qui means clustering the leak Was Almost Certainly a strategic decision with additional incentives. That Could mean Micron That is simply telling Unigroup That icts $ 21 offer price is too low, and it will need to raise considerably the face for Micron to go to the trouble of Pursuing a deal That: has a significant risk of getting rejected.
Chiese Investors unconvinced
Certainly Investors About did not see things That Way, with Micron's shares tumbling 6 percent in the latest trading session to $ 18.89, or 10 percent below the planned offer price. The shares have risen HAD high as $ 20.12 partner after the news first reported about last weekend Was. Aim it's worth Noting That aussi Micron's stock lost about half HAS icts of value over the last 7 months due to stiff competition in the market for computer memory That Is used to power MOST of today's electronic devices.
This rebuff from Micron means clustering the ball is now in Unigroup's court, and the Chinese company will-have to decide WHETHER to come back with a Significantly Higher offer, Perhaps around $ 30 per share. That Would mean Unigroup Would Have to pay a lot more for Micron, well over $ 30 billion, a deal for Not Even That might get approved.
If this Were a rational, market-driven position I would Say That Would Unigroup give up on the offer and this Would Be The End of the story. Purpose in this instance, I really believe That political force and are Involved Unigroup is being white Strongly supported by the central government. China is already the biggest buyer of memory chips and Beijing desperately Would like to Become a global player in the microchip market. Accordingly, I predict That Unigroup will come back with a Sharply Higher bid soon, Perhaps in 1-2 weeks, and 2 sides que la Their talks will summary At That Point.