Todor Pichurov

Court Ruling On Micron Technology, Inc. (NASDAQ:MU) Acquisition of Elpida Delayed By a Month

by Todor Pichurov October 3, 2012
182MU_chart.pngBankrupt chipmaker Elpida announced that a Japanese court has once again delayed its final decision in approving one of the submitted restructuring plans for the enterprise.

The court formed a special committee which is to examine in detail the two rivaling plans. Micron Technology, Inc. (NASDAQ:MU, MU message board) submitted a plan to acquire Elpida for the sum of $2.5 billion but this faced serious resistance from Eplida bondholders, who thought the plan grossly undervalued Elpida's worth, despite the billions of debt weighing over Elpida's shoulders.

The bondholders submitted their own restructuring plan that involves another huge loan to revive the company. Elpida itself is against the bondholder outlook on things and the company even filed an official statement opposing the actions taken by the disgruntled bondholders.

The court is expected to come out with a final ruling on the matter on October 29. Should Micron's plan to acquire the defunct Japanese chipmaker obtain approval, Idaho-based MU stands to gain significantly with an early 2013 closure of the deal, adding Elpida's production facilities to its assets base.

The last few days have been disappointing for Micron, as they reported Q4 earnings last week and missed their EPS estimate, which was already a $-0.21. The following days saw MU stock slip down from levels of around $6.20 to yesterday's close of $5.84. The company reported net loss that widened by $108 million on a year-over-year basis. Competitor SanDisk Corporation (NASDAQ:SNDK) on the other hand had a very good day yesterday, climbing $1.30 or 3.02% up at the close.

Considering MU's financial situation and the fact that markets are overstocked with memory products that are struggling with slow demand and failing prices, especially in the PC portion of the market, one can argue whether a multi-billion dollar acquisition is the best move for the company, but CEO Mark Durcan has voiced his belief that the deal is in the best interest of Micron and its investors.

IMPORTANT MICRON UPDATE: October 3rd 2012 - MU is making a chart pattern that has been seen 43 times since the year 2000.  74.42% of the stocks that have made this pattern went down over 9% on average in a 20 day period.  Watch the video to learn more about the probabilities of MU stock moving up or down.

MU Backtested Performance
                                                                                                 >>Click here to watch the video and learn more

Comments 0

Type the characters that you see in the box (5 characters).