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Micron plans to purchase Toshiba plant in Virginia

SHARE Micron plans to purchase Toshiba plant in Virginia

BOISE — Micron Technology will purchase Toshiba's memory chip plant in Virginia, and analysts say Micron is getting a great deal.

Micron will pay Toshiba $250 million in cash and 1.5 million shares of Micron stock for the assets, according to a document filed with the Securities and Exchange Commission this week.

Analysts said Thursday it would cost Micron five to 10 times that amount to build a similar facility from scratch.

"It could be considered a great deal," said Dan Scovel, an analyst with Needham & Co. in New York.

Micron will end up with a 600,000-square-foot fabrication plant in Virginia, which operates under the name Dominion Semiconductor.

A memorandum of understanding was signed Dec. 18. The deal is expected to close before summer, after due diligence and regulatory approvals are completed.

The terms of the deal were not disclosed until the filing was made this week. Micron Chairman and Chief Executive Officer Steve Appleton said in December that the cash outlay in the acquisition would be insignificant to the company.

"$250 million is not a lot in terms of a company the size of Micron," said Sherry Garber, an analyst with Semico Research Corp. in Phoenix. "Were they to build a new facility, it's very likely it could cost over $3 billion today. They got a very good deal."

The terms, considered thrifty by analysts, still leave Micron in a strong financial position.

The Toshiba purchase will have no impact on any potential deal with Korea's Hynix Semiconductor, with whom Micron has been negotiating for more than a month.

Hynix is the world's third-largest DRAM memory chip producer, with 13 fabrication plants worldwide. Micron is the world's second-largest DRAM producer.