Micron Entertains $23 Billion Buyout From China's Tsinghua Unigroup
Citing people familiar with the matter, The Wall Street Journal says Tsinghua Unigroup is trying to acquire Micron for $21 per share. That represents a more than 19 percent premium over Micron's stock price at the time the story broke, and though that seems attractive at a glance, it's also around 21 percent below Micron's 100-day moving average of $26.61. It's even worse if you look at the 200-day moving average, which is $29.50.
That's just one hurdle. Even if Micron decided to accept the offer -- and it's not clear if an official offer has even been made -- there are security concerns. According to Reuters, the U.S. Department of Defense might not be so keen on Micron selling its assets to China, as it could present a threat to national security.
The reason? Micron is a major supplier of DRAM and NAND flash memory chips. Today's weapons technology is heavily reliant on computer chips, so a deal like this involving China, which has been linked to U.S. cyberattacks, would face certain scrutiny.
"This seems highly unlikely, just given the technology that's involved. This is a massive deal, really important technology and quite frankly, it's the Chinese," said Reed Smith, a partner at Leigh Hansson who heads the firm's International Trade & National Security practice.
It's not an impossible deal to make. Tsinghua Unigroup already has ties to U.S. chip technology, as it formed a partnership with Intel last year to jointly develop mobile technology.