Micron to buy Numonyx in US$1.2B deal

update Both companies enter definitive agreement worth US$1.27 billion, that sees Micron Technology acquiring one of world's largest flash memory makers.
Written by Vivian Yeo, Contributor

update Flash memory maker Numonyx has been acquired by Micron Technology in a deal valued at about US$1.27 billion, the two companies said in separate statements Wednesday.

The pair entered into a definitive agreement for Idaho-based Micron to buy over the privately-held Numonyx in an all-stock transaction, according to a media statement on Micron's Web site.

Numonyx, currently owned by STMicro, Intel and Francisco Partners, was launched on Mar. 31, 2008. Combining Intel's NOR flash business and STMicro's NAND flash business, it was then said to be the largest NOR flash supplier and biggest flash supplier to the mobile phone market.

The transaction, according to Micron, is expected to close within three to six months, subject to regulatory approval. The company noted that the acquisition would add to its cashflow and non-GAAP (U.S. Generally Accepted Accounting Principles) earnings from fiscal 2011.

"Acquiring Numonyx brings together two memory leaders, and positions Micron to offer the most comprehensive, cost-competitive solutions in the industry to a broad range of customers and end-markets," said Steve Appleton, chairman and CEO of Micron, in the statement.

A separate release from STMicroelectronics said the new Micron-Numonyx entity's center of excellence for technology and product development of NOR, stacked NOR and phase change memory for wireless and embedded applications, will be based in Italy.

Once the transaction is finalized, ST and the merged company will also continue to share the R2 facility in Agrate, Italy, for technology research and development and manufacturing activities.

Both players gain
Gregory Wong, president of Forward Insights, said in an e-mail interview the deal was a win-win for both Micron and Numonyx. Forward Insights is a consulting and market research firm specializing in non-volatile semiconductor memory.

"Micron and Numonyx are more complementary in their product portfolios," he explained. "Micron gains Numonyx mobile phone relationships and phase-change memory, while Numonyx's future is no longer in doubt--it will survive as part of a larger entity."

According to Wong, rumors about an impending merger between the two companies have been brewing since last year. "Numonyx's core business is in NOR flash memory, which is a declining market, and it was clear they needed to take some action to expand into growth markets," he said.

The new entity, he added, offers a complete portfolio of DRAM, NAND and NOR, making it "comparable to Samsung".

With the acquisition, industry alliances are also expected to change. Numonyx's relationship involving NAND development and manufacturing with Hynix, a competitor to Micron, "is dead" while Micron looks set to enjoy a closer relationship with Intel, he said.

"[Japanese memory maker] Elpida, with a significant mobile DRAM business, looks vulnerable," Wong noted, adding that the company "may have to seek out a partner on NAND" to hold on to their market stake.

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