Micron Qimonda merger likely to happen, says analyst
One of the key drivers for the deal is the fact Micron will be able to leverage Qimonda’s Inotera joint venture, which would add additional Taiwan facilities and IP revenue opportunities for Micron, in addition to its existing MeiYa joint venture with Nanya Technologies. Qimonda’s fab assets are also more valuable to Micron, compared with other potential buyers, such as Hynix or Nanya, as their common geographies allow logistics synergy, Freedman noted.
Since Qimonda cannot fund projected losses through fiscal year 2009, Freedman expects that a deal could be done for US$350 million, near US$1 per share, or 25% of the US$4 per share book value. Freedman estimates an additional cost of about US$100 million would be required to convert Qimonda fabs to Micron processes.
Still, such a deal would would significantly reduce DRAM capacity investments in fiscal year 2009 for Micron, according to the note. Freedman calculated a US$500 million fiscal year 2009 capex for Micron’s organic DRAM capacity.