By Shannon Davis, Web Editor
China’s state-owned Tsinghua Unigroup Ltd. is preparing a $23 billion bid for chipmaker Micron Technology, in what analysts say would be the biggest Chinese takeover of a U.S. company.
Tsinghua, China’s largest state-owned chip design company, is prepared to bid $21 per share for Micron, according to Dow Jones.
As of Tuesday, a Micron spokesman told Reuters that the company had not yet received an offer, while Tsinghua chairman Zhao Weiguo told Bloomberg that the Chinese company was “very interested in cooperation” with Micron.
Tsinghua’s potential purchase of Micron is regarded as a strategic move to help the advancement of China’s own chip sector. The country currently has no major home-grown memory makers, according to Reuters.
Micron is the last remaining U.S. producer of DRAM memory chips, and any foreign takeover would still have to pass a review by the Committee on Foreign Investment in the United States, to examine the national security implications of the deal. The deal would also need to be examined by the Chinese National Development and Reform Commission.
This would not be the first significant consolidation in the memory sector this year. In May, Hewlett-Packard sold a 51 percent stake in its data-networking business to Tsinghua for approximately $2.3 billion.
What the analysts are saying
“Valuation appears low as a potential $21 a share bid is 8.3 times fiscal year PE or low end of the historic range of 7 to 15 whereas Micron was at $32 just 5 months ago,” UBS analyst Stephen Chin told MarketWatch.
MarketWatch speculated that a cheap valuation could encourage other companies to launch their own bids.