US memory firm Micron Technology has snapped up Lexar Media for $680 million in a stock-for-stock merger.
The acquisition would give Micron a leg up in the NAND flash market and potentially improve Lexar's competitive position against SanDisk. Lexar investors appeared most receptive to the idea, sending shares up 22 per cent - just past the premium Micron agreed to pay for the company. Meanwhile, Micron shares lost 2 per cent, and SanDisk shares sank 6 per cent.
SanDisk currently has a solid deal in place with Toshiba to source NAND memory. This has helped SanDisk lower costs of its flash-memory cards, which slot into all kinds of devices such as cameras, cell phones, and MP3 players.
Should the acquisition go through, Lexar could get its NAND memory right from Micron instead of dealing with current supplier Samsung. This would help Lexar battle SanDisk.
The merger will give the company a better foothold in the ultra-competitive NAND flash market:
The acquisition will strengthen Micron’s position in the NAND flash business and enable the company to deliver innovative NAND flash solutions from design, development and manufacturing to marketing and sales of products to worldwide consumers and device manufacturers. The merger is designed to combine Micron’s technology and manufacturing leadership in NAND flash memory with Lexar’s leadership in NAND controller and system design technology, brand recognition and retail channel strength to create a vertically integrated entity fully focused on the NAND business.
Per the agreement, each outstanding common share of Lexar will receive 0.5625 shares of Micron stock. Micron will issue shares in exchange for 81.6 million outstanding Lexar shares. The deal faces shareholder approval and other standard approvals. It could close by the end of the third quarter if all goes as planned.