8-KMaterial AgreementsRegulation FDExhibits & Filings

MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Jul 2, 2012)

Filed July 2, 2012For Securities:MU

Summary

Micron Technology, Inc. has entered into a significant agreement to support the reorganization of Elpida Memory, Inc. and its subsidiary Akita Elpida Memory, Inc. This involves Micron committing to provide 200 billion yen (approximately $2.5 billion) towards Elpida's creditors. A substantial portion of this, 60 billion yen ($750 million), will be an upfront cash payment for 100% ownership of Elpida. The remaining 140 billion yen will be paid in installments by Elpida from 2014 to 2019, facilitated by cash flow from foundry services provided by Elpida as a Micron subsidiary. Additionally, Micron will provide financing support for Elpida's capital expenditures and debtor-in-possession financing, demonstrating a deep commitment to the integration and future operations of Elpida. This acquisition positions Micron to significantly expand its market share and technological capabilities in the memory industry. The deal is subject to various closing conditions, including regulatory approvals in several countries and court approvals in Japan, with an anticipated closing in the first half of 2013. The transaction also includes a separate agreement to purchase an additional 24% stake in Rexchip Electronics Corporation, a joint venture of Elpida, from Powerchip, further consolidating Micron's control over critical manufacturing assets.

Key Highlights

  • 1Micron to acquire 100% ownership of Elpida Memory, Inc. for approximately $750 million cash upfront, as part of a larger ¥200 billion (approx. $2.5 billion) commitment to Elpida's creditors.
  • 2The acquisition is structured with staged payments to creditors, with the remaining ¥140 billion (approx. $1.75 billion) paid by Elpida through installments from 2014-2019, funded by foundry services from Elpida to Micron.
  • 3Micron will provide financing support for Elpida's capital expenditures (up to ¥64 billion / approx. $800 million) and debtor-in-possession financing (up to ¥16 billion / approx. $200 million).
  • 4Micron is also acquiring an additional ~24% stake in Rexchip Electronics Corporation from Powerchip for approx. $334 million, increasing its control over this manufacturing joint venture.
  • 5The transaction is subject to numerous closing conditions, including court and creditor approvals in Japan, and regulatory approvals in multiple jurisdictions.
  • 6The anticipated closing date for the Elpida acquisition is in the first half of calendar year 2013.
  • 7The report includes forward-looking statements highlighting potential risks and uncertainties related to the transaction's success, integration, and market competition.

Frequently Asked Questions

The primary strategic goal is to significantly expand Micron's market position and technological capabilities in the global memory market by integrating Elpida's operations and assets, thereby achieving greater scale and potential synergies.

Micron is making an initial cash payment of 60 billion yen (approx. $750 million) for 100% ownership. The remaining 140 billion yen commitment to creditors will be paid in installments by Elpida from 2014 to 2019, with payments generated from foundry services Elpida will provide to Micron post-acquisition. Micron is also providing financing support for Elpida's capital expenditures and debtor-in-possession financing.

Key risks include the possibility that the transactions may not close as expected, challenges in integration, achieving planned synergies, currency fluctuations impacting payments, maintaining customer relationships, competition in the memory market, and securing necessary regulatory and court approvals. The report also highlights potential adverse impacts from increased leverage and future payment obligations.

The transaction is currently anticipated to close in the first half of calendar year 2013.