Softbank Completes Its Kingston Purchase

Softbank Corp. completed its $1.5-billion purchase of an 80% stake in memory-chip maker Kingston Technology Corp., extending the Japanese company’s reach in the high-tech arena.

Tokyo-based Softbank will issue $425 million of common stock and pay more than $1 billion in cash for closely held Kingston, the world’s largest maker of computer-memory products. The acquisition, announced Aug. 15, allows for additional payments based on Fountain Valley-based Kingston’s earnings in 1996 and 1997.

Kingston’s co-founders, David Sun and John Tu, will retain a 20% stake in the business and will continue to operate the company as well.

Tokyo-based Softbank steps into the memory market at a time of oversupply and falling prices. Prices for DRAM, or dynamic random-access memory, chips will have dropped about 70% by the end of this year. Kingston announced earlier this week that it has cut prices in its entire line of memory products by as much as 50%, its fourth cut this year.

Today’s purchase is part of a two-year buying binge for Softbank, which has picked up a series of companies seeking to profit from the digital revolution. The acquisitions have pushed Softbank’s debt to about $3.2 billion. The company has said it will issue about $800 million in bonds to help pay for the Kingston purchase.