There have been rumors circulating about this deal since late last year. The deal now propels Micron (Boise, Ida.) into the NOR and phase-change memory (PCM) sectors. Micron also expands its thrust into NAND flash.

Numonyx (Geneva) is the world's largest NOR flash supplier, but it is a niche player in NAND. The company, which is a pioneer in PCM, is on course to provide customers with samples of its 1-Gbit PCM in the first quarter of 2010.

In NAND, Numonyx has a product partnership with Hynix Semiconductor Inc., which will likely end as a result of this deal. Numonyx has a foundry deal with Elpida Memory Inc., which will also likely end.

With the deal, Micron ''becomes an integrated memory provider spanning DRAM, NAND and NOR comparable in breadth to Samsung and gain a new memory technology, PCM which has the potential to replace NAND and DRAM,'' said Gregory Wong, an analyst with Forward Insights.

Micron shipped $1.130 billion in NAND in 2009 and Numonyx shipped $1.770 billion in (total) flash or only $297 million in NAND in 2009, according to Web-Feet Research.

''Micron paid below market rates for Numonyx, but like Microchip buying SST, this seems to be market prices based on recession economics,'' said Alan Niebel, CEO of Web-Feet Research. This month, Microchip Technology Inc. struck an agreement to pay approximately $273 million for rival NOR supplier Silicon Storage Technology Inc., which has also terminated a previous merger deal with a private equity investment group.

''Numonyx is the number one NOR vendor in 2009 and has at its disposal PCM that will enter the market in 2010,'' Niebel said. ''Micron now is a one-stop memory house like Samsung except Micron does not have SRAM. With Numonyx, Micron can now go after the handset OEMs with a full complement of NOR, NAND, and DRAM in its product line.''

"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 a statement.

Intel Corp. may have brokered the deal, some speculated. For some time, Intel has been backing two flash ventures: Numonyx and IM Flash Technologies LLC. IM Flash is a joint NAND partnership between Intel and Micron.

To back two flash ventures makes little sense for Intel. Formed in 2008, Numonyx is the memory spin-off of Intel and STMicroelectronics. STMicroelectronics holds a 49 percent stake in Numonyx, Intel has 45 percent and Francisco Partners owns 6 percent. The new venture is selling NOR, NAND and phase-change memory, based on technology from Ovonyx Inc.

Under the terms of the agreement, Micron will issue 140 million Micron common shares to Numonyx shareholders, Intel, STMicroelectronics and Francisco Partners. Up to 10 million additional Micron common shares will be issued ratably to Numonyx shareholders to the extent the volume weighted average price of Micron shares for the 20 trading days, ending two days prior to the close of the transaction, ranges between $7.00 and $9.00 per share.

Micron currently estimates that the transaction would be accretive to the company on both free-cash flow and non-GAAP earnings beginning fiscal year 2011. In addition, it is anticipated that the Numonyx balance sheet will be debt-free following closing.

The transaction is subject to regulatory review and other customary closing conditions and is currently anticipated to close within three to six months.

By: DocMemory
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