SanDisk Snatches Up Msystems

Staff Reporter -- 7/31/2006

Flash memory player SanDisk Corp. has inked a $1.35 billion deal to acquire its solid-state memory competitor, Israel-based Msystems Ltd., in an all-stock transaction.

Both companies work in the realm of NAND flash storage, although Msystems has a closer focus on cellular-phone handset solutions than Milpitas, Calif.-based SanDisk.

"In the near term, this transaction better positions SanDisk to serve the expanding storage needs of handset manufacturers and mobile network operators," Eli Harari, SanDisk's chairman and CEO, said in a statement. "We are extremely excited about joining forces with the Msystems team to achieve our shared vision. We are committed to serving Msystems' OEM customers after the transaction closes."

With the purchase of Msystems, SanDisk also gains leverage into the 4-bit-per-cell NAND flash technology market. Msystems' x4 product is a technology designed to enable the utilization of 4-bit per cell NAND flash. The purchase may be coming at a crucial time for Msystems, a company that has not been immune to the recent stock-options backdating scandal in the tech industry.

In the transaction, which is expected to close in Q4, each Msystems ordinary share will be converted into 0.76368 of a share of SanDisk common stock, representing a 26 percent premium over the average closing price of $28.38 for Msystems' shares in the last 30 trading days.

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