SK Hynix announced it will not participate in the bid for Tokyo-based Elpida Memory on Friday after it took a cautious stance on the issue last week.
Following a board meeting which went on for more than two hours, its decision-makers came to the conclusion not to join the second round of bidding to take over the financially troubled Elpida.
“What’s important is whether the second bidding is worth it in strategic aspects, but we decided that the acquisition doesn’t give us the advantage strategically,” said SK Group chairman Chey Tae-won.
The world’s second-largest computer memory chipmaker has hinted last week that it may not go forward with the Elpida acquisition, stating it will “decide its bid joining after getting the results of the due diligence.”
The firm’s head of financial division Lee Myoung-young said SK Hynix plans to make investments within its possible boundaries, which is far less than what it has to pay for the takeover of the Japanese chipmaker. Elpida currently has debts worth up to 6 trillion won ($5.3 billion).
Many analysts also stood against the acquisition, making suggestions to the company’s executives during its earnings conference that other options are available to reach further growth.
The dropout of SK Hynix comes in line with the firm’s decision to concentrate on NAND Flash memory chips, widely used for wireless devices such as tablet PCs and smartphones.
Elpida, which is the world’s third-largest maker of dynamic random access memory chips, does not produce NAND Flash memory.
Meanwhile, the selling of Elpida became unclear with the absence of SK Hynix and Toshiba, leaving it up to two groups ― Micron Technology and Chinese investment fund Hony Capital, which teamed up with U.S. private equity firm TPG Capital. The final list, however, was not unveiled.
The preferred bidder for Japan’s only maker of DRAM chips will be finalized next week.
By Cho Ji-hyun (firstname.lastname@example.org)