SK Telecom (Seoul, South Korea) has agreed to buy 21% of Hynix Semiconductor (Icheon, South Korea) for $3 billion in its biggest ever acquisition that will help the creditors-turned-shareholders find a new owner for the chipmaker after years of failure.
The $3 billion deal comprises of SK Telecom paying $2 billion to Hynix and the remaining $1 billion to nine shareholders of the world's second largest computer memory chipmaker.
"With the fresh fund, Hynix will be able to improve its financial stability and continue to invest to raise its competitiveness,” the country's top mobile carrier says in a statement.
Ratings agency Standard & Poor's Ratings Services (New York), however, on Monday placed SK Telecom on a negative outlook, saying the takeover could hurt the firm's credit quality.
"Although Hynix maintains a strong position in the global memory semiconductor industry, its volatile operating performance and large capital expenditure requirements could undermine SK Telecom's stable cash flows," says Standard and Poor’s.
SK didn't elaborate how it will fund the acquisition.
SK Telecom had offered to buy new shares issued by Hynix at $20 each, or a 7% premium to the November 10 closing price, and purchase existing shares from nine shareholders for $21 each, a 14% premium.
Creditors saved Hynix from a debt crisis in 2001 and have scaled down their stake in Hynix but failed several times to complete a full sale.
Nine Hynix creditors-turned-shareholders, including Korea Exchange Bank, state-run Korea Finance Corp, Shinhan Bank and Woori Bank have sought to recoup billions of dollars they injected into the debt-ridden chipmaker several years ago following the Asian financial crisis.
Attempts to give management control to a domestic company for fear of a potential leak of advanced technologies has cooled interest in Hynix at a time when investors are avoiding the capital intensive and cyclical memory chip sector.
SK aims to close the deal by the first quarter of 2012.
(Additional reporting by Hyunjoo Jin; Editing by Jonathan Hopfner and Miyoung Kim)