Micron to buy Numonyx

Micron Technology is to acquire Numonyx Holdings – the memory spinout formed by Intel and STMicroelectronics – in an all-stock deal valued at about $1.27bn.

Numonyx is the world’s number-three maker of flash-type memory chips, specialising in NOR flash, which is used for program storage in cellphones and other embedded devices. Intel and Numonyx have been working on a potential replacement for NAND flash memory used for bulk data storage based on phase-change materials. Micron has a separate joint venture with Intel in the NAND flash market.

Under the agreement, Micron will issue 140 million Micron common shares to Numonyx shareholders, Intel, STMicroelectronics, and Francisco Partners. Since March last year, Micron’s share price has trebled thanks to a resurgent memory business following the DRAM and flash market's near collapse at the end of 2008.

Up to 10 million additional Micron common shares could be issued based on other factors including the volume weighted average of the price of Micron shares. STMicro said in a statement it will net around $527m worth of Micron shares from the deal.

On a conference call with investors, Micron chief executive Steve Appleton said the deal helps further diversify Micron’s business amid the growing mobile device market as smartphone memory needs grow, and lower-end cellphones with smaller memory become more ubiquitous in the developing world.

Daewoo Securities analyst James Song said that because Hynix Semiconductor already has a relationship with Numonyx, Micron’s takeover of Numonyx could actually help their strategic relationship catch up with bigger rivals South Korea’s Samsung and Japan’s Toshiba and boost market share.

“We think we will clearly be the second-largest producer of memory. Obviously Samsung’s still very strong, but we will start differentiating ourselves even more from the rest of those in the industry,” he said.

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