RealTime IT News

In a Flash, a Retail Boon For SanDisk

SanDisk  today agreed to purchase msystems Ltd.  for $1.55 billion in stock, a deal that would add another big fish to the shrinking pool of Flash memory technology.

Both vendors make USB drives and Flash memory  cards, coveted by makers of mobile phones, MP3 players and digital cameras, because the data is retained even when the power is cut off.

There are two main types of Flash memory: NAND and NOR .

NOR Flash memory has traditionally been used to store relatively small amounts of executable code for embedded computing devices such as PDAs and cell phones.

NAND Flash memory has become the preferred format for storing larger quantities of data on devices such as USB Flash drives, digital cameras and MP3 players.

SanDisk and msystems specialize in NAND; SanDisk sells to retail outlets while msystems keeps the lower profile, selling products that fit in mobile phones to original equipment manufacturers (OEMs) such as Kingston and Memorex.

In that regard, the vendors complement each other, and together they should be able to insert Flash memory into more products and storage applications, said Gartner analyst Joseph Unsworth.

Unsworth said that SanDisk is big on promoting its brand.

"Msystems has strategically pushed its view to provide as many solutions as possible for the handset, as they feel the handset will be a leading NAND Flash demand driver," Unsworth said.

"By acquiring msystems, SanDisk takes their existing mobile phone Flash card format and the in-system solution mDoc and Megasim and now has all of the solutions in force for any means to have data storage in the handset," he said.

The deal will also elevate SanDisk's position among the fellow Flash giants like Toshiba and Micron, whose bid to buy Lexar earlier this year has been opposed by major investor Carl Icahn.

"This strategic acquisition will give us the critical mass and complementary products, customers, channels, technology and manufacturing base to take our shared vision to the next level," said SanDisk CEO and chairman Eli Harari in a statement.

"The NAND Flash  data storage business is in its early stages and we believe the market opportunity is largely untapped."

In the deal, each msystems share will be converted into .76368 of a share of SanDisk common stock. This is a 26 percent premium over the average closing price of msystems' shares for the last 30 trading days.

SanDisk said it expects to close the deal in the fourth quarter of 2006.