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Micron's Lexar Bid Succeeds

Posted on: Monday, 19 June 2006, 18:00 CDT

By Bob Mims, The Salt Lake Tribune

Jun. 17--Micron Technology Inc. finally won over Lexar shareholders late Friday with a sweetened buyout offer worth at least $800 million, giving the Boise, Idaho-based company a critical boost in the global flash memory market.

A majority of Lexar shareholders, about 53 percent, voted for the offer, although Lexar Chief Financial Officer Michael Scarpelli said exact vote totals would not be available until they are certified, possibly Monday.

"We are extremely pleased with the outcome of today's vote," said Eric Stang, Lexar's chairman, chief executive officer and president. "We believe that our merger with Micron is the best option for our stockholders, our employees and the future of Lexar."

The original vote had been set for June 2, but it was postponed after Micron, fearing its initial offer would be defeated by opponents led by billionaire financier Carl Icahn, upped the ante from its original $735 million bid. Icahn could not be reached for comment Friday.

The Lexar deal is critical for Micron. The company is ramping up its Lehi plant and needs Lexar's production and distribution strengths to meet rapidly growing demand for high-capacity memory products for digital cameras, cellular "smart" phones, mini-storage gadgets and music players. Lexar provides flash memory for Kodak, Canon, Minolta, Nikon and Pentax digital cameras, and boasts major corporate accounts including Wal-Mart and BestBuy.

The actual value of the acquisition won't be set until its formal closing; no date for that was immediately set. If share prices continue to rise on the news, the final price could go much higher. Micron stock closed Friday, before the vote, at $16.35 per share, up 31 cents or 2 percent. Lexar shares rose 18 cents, or 2 percent, to $9.61.

Micron spokesman Dan Francisco said the acquisition will give his company's clients a complete package of flash memory solutions.

"Together with our [flash memory] designs, technology, manufacturing capability and distribution channels, Micron is in a strong position to serve the flash storage requirements of the consumer electronics and enterprise segments," he said.

The boards of both companies unanimously recommended passage.

Icahn & Associates and Elliott Associates, which own a combined 15 percent of Lexar's stock, opposed both takeover bids. The investors insisted Lexar was worth more than the stock swap Micron offered: one Lexar share for 0.5925 shares of Micron.

Opposition began to unravel over the past week with the defection of Glenview Capital Management. The New York-based hedge fund signed a pact with Micron to vote its estimated 10 percent share of Lexar in favor of the deal.

"This deal makes great sense for both companies," said Joseph Osha, an analyst with Merrill Lynch. "There's been way too much focus on the near-term dilutive aspect of the deal and not nearly enough focus on the strategic merits of the transaction."

Micron is partnering with Intel to provide flash memory modules to Apple's iPod music and video players. Its sprawling, 12-building Utah County complex -- rechristened IM Flash Technologies -- expects to approach a 2,000-strong work force by early next year, five times larger than what it had employed there for nearly a decade.

Micron had $4.9 billion in sales and net income of $188 million for fiscal 2005.

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MU, LEXR,

Source: The Salt Lake Tribune

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