Citigroup to buy Korean chipmaker for $822m

Citigroup Venture Capital (CVC) has agreed to buy the non-memory chip unit of financially embattled Hynix Semiconductor in a deal worth won 954 billion ($822 million, €673 million).

Terms of the deal were not disclosed. The Korean daily newspaper The Chosun Ilbo reported that creditors of Hynix, Korea’s second largest chipmaker and the world’s third largest memory chipmaker, announced the acceptance of CVC’s offer to buy the division, which makes flat-screen chips and digital camera sensors.

The news comes after more than a year of talks – which began in February 2003 – between CVC and Hynix, which has been looking for ways to cut its multibillion dollar debt and invest cash into its core memory business, a strategic alliance with French firm STMicroelectronics, and a new factory in China, according to Korean news sources.

The Chosun Ilbo also reported that creditors have agreed to provide a total of won 379.3 billion ($327 million, €268 million) in loans to CVC for the acquisition, with final terms of the transaction to be reached by the end of next month.

CVC originally offered 400 billion won during initial negotiations, but later raised the offer due to efforts by creditors and the overall recovery in the memory semiconductor market, the newspaper stated.