Hynix inks deal with Micron


The two companies signed only a nonbinding agreement on the sale and still have until April 30 on talks

Alex Frew McMillan
CNN Hong Kong

SEOUL, South Korea (CNN) -- Hynix Semiconductor Inc. has signed a preliminary deal to sell its memory-chip operations to Micron Technology Inc. for $3.4 billion.

But the two companies, which technically signed a memorandum of understanding, gave themselves until April 30 just to finalize the terms.

Such a deal would make Micron the largest memory-chip maker in the world, bigger than current industry leader Samsung Electronics.

Micron is preparing to pay for the operations in stock, with around 108.6 million of its shares. They stand at $29.50 as of the close of Wall Street trade on Friday.

As part of the deal, Hynix's creditors are arranging $1.5 billion in long-term debt for Micron to use in Korea.

Micron is also investing $200 million in Hynix, for a 15 percent stake in its other operations outside of memory chips, the company said in a statement. Hynix issued its own statement on the deal at the same time.

Hynix stock ends down

Seoul-based Hynix saw its stock close down 6.7 percent at 1,175 won, despite typically rallying around developments in the Micron sale.

That fall came on a day the main Korean index, the Kospi, dropped after early gains.

But the companies signed the memorandum of understanding after the close of trade. Also earlier in the day, Korea's Financial Supervisory Commission warned that are still obstacles in the way of a sale of the memory operations to Micron.

Both companies can walk away from a memorandum of understanding without a monetary or legal penalty.

Boise, Idaho-based Micron noted in its statement that the MOU is nonbinding.

Deals involving American buyers and Korean target companies have often run into trouble, even after a final deal is signed.

General Motors is still in talks to buy Daewoo Motor, Korea's third-largest car company (full story on union deal).

After Daewoo won approval from its unions on the sale, a final deal was expected to be finalized on Tuesday. But it was put off again.