In exchange for three manufacturing facilities and Texas Instruments' interest in two joint ventures, Micron will assign TI 28.9 million shares of its common stock, making TI the largest stakeholder in the Boise, Idaho, chipmaker. Micron will also assume some $190 million in debt, but will receive $750 million in financing from TI, underlining the risky nature of its acquisition.
In addition, the agreement includes a ten-year cross-licensing agreement.
Simultaneously, TI will take a second-quarter charge estimated to be $270 million, the cost of a restructuring program intended to close out the company's memory operations. About 3,500 employees will be laid off.
The deal is the latest in a string of memory divestitures by TI over the last three years as it focuses on more specialized computer chips known as digital signal processors (DSPs), most commonly used in cellular phones and similar communications devices.
"We have become a dramatically different company, a smaller company, one very focused now on DSPs," Texas Instruments' CFO Bill Aylesworth said.
Also, Kobe Steel, a major Japanese steel maker, said on Friday that it and Micron would invest more than 40 billion yen in Kobe Steel?s Japanese unit, KTI Semiconductor, in the next two years.
KTI Semiconductor had been a joint venture with TI. Kobe Steel also said Micron would take over TI's stake in KTI by the end of August. KTI is currently owned 75 percent by Kobe Steel and 25 percent by Texas Instruments. The value of the deal was not disclosed.
Last week, Taiwan computer manufacturer Acer completed its takeover of a joint memory venture it cofounded with Texas Instruments in 1989. TI received 120 million shares of stock for the money-losing firm.
In February, a major joint memory chip venture between Hitachi and TI fell apart under the weight of tumbling memory chip prices.
A glut in chip supply and the devaluation of Asian currencies, among other factors, have forced prices of 16-megabit and 64-megabit memory chip prices to levels near and even below manufacturing costs. The result is that a number of the world's largest memory chipmakers are either scaling back investment in new plants or even divesting themselves altogether.
The agreement will be wrapped up in the second half of 1998, the two companies said in a statement. Micron finished the day trading at 22.1875 while TI wound up at 54.5, both up slightly. The agreement was announced after the close of the market.
Earlier today, Micron reported a net loss for its third quarter of fiscal 1998 of $106 million, or 50 cents per diluted share, on net sales of $610 million. Micron's net sales in the second quarter totaled $755 million, and its net loss was $48 million, or 23 cents per diluted share.
Reuters contributed to this report.