Micron, Lexar Shareholders Set to Vote on Possible Merger

Shareholders from two memory chip companies will meet Friday to vote on a merger that has been marred by high-profile opposition, a court hearing to postpone the vote, and an increased offer to help ensure the completion of the deal.

Micron Technology has proposed to buy flash memory technology company Lexar Media in an all-stock transaction valued at about US$750 million. Lexar shareholders will swap each one of their shares for 0.5925 of Micron common stock.

The deal could create a new flash memory powerhouse in Micron, since Lexar owns a number of fundamental patents based on the technology. Micron and Intel established a joint venture flash memory company last year, IM Flash Technologies, which is aimed at putting the two companies in the thick of the fastest-growing segment of the chip industry, the $13 billion NAND flash memory business.

Toshiba and Samsung Electronics currently dominate the NAND flash memory business. The high-storage capacity chips have gained popularity because they retain data even after power has been shut off, making them ideal for storing songs, pictures and other data in digital cameras, mobile phones, digital music players and other devices.

Last year, Lexar won a court case against Toshiba, and it has filed a complaint in the United States seeking to bar the import and sale of some Toshiba NAND flash memory chips and products that allegedly violate its patents. In the earlier case, the court ordered Toshiba to pay Lexar about $465 million for a variety of reasons, including theft of trade secrets. Toshiba has appealed the verdict.

The merger agreement between Micron and Lexar has faced pockets of opposition ever since it was announced in March. The original deal was valued at around $680 million, but was rejected outright by a powerful group of shareholders led by billionaire Carl Icahn.

The new agreement was meant to assuage investor concerns, but it’s unclear whether it has. A CNN news report said Icahn still opposes the deal.

Icahn and his investment groups control 7.47 percent of the voting shares in Lexar, or 6.18 million shares. It’s not enough to stop the deal, but if he can convince other investors to join him, he could derail the Friday vote.

-Dan Nystedt, IDG News Service (Taipei Bureau)

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