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June 20, 2006 > Shareholders approve Lexar-Micron merger

Shareholders approve Lexar-Micron merger

by May Wong

SAN JOSE, Calif. (AP), Jun 16 - A majority of Lexar Media Inc. shareholders on Friday approved the flash memory card maker's acquisition by Micron Technology Inc. in a sweetened, all-stock deal valued at about $801 million.

The approval clears the way for a merger that could strengthen memory-chip maker Micron, as it gains Lexar's consumer products business and patent portfolio.

Investors representing more than 50 percent of Lexar shares OK'd the deal, Lexar spokesman Michael Scarpelli said. The outcome will likely stay the same after a certification process, he said.

Flash memory is the storage component commonly found in digital cameras, music players, keychain storage devices and a variety of other electronics. Industry sales worldwide are expected to reach $13.5 billion this year, up from $10.6 billion in 2005.

With the acquisition, Micron will be able to offer a more complete package of flash products, said spokesman Daniel Francisco.

"Together with our NAND 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.

Boise, Idaho-based Micron, the world's fifth largest flash memory maker in 2005 according to market researcher IDC, also teamed up last year with chip maker Intel Corp. in a joint venture to better compete in the fast-growing NAND flash memory market.

Under the Micron-Lexar deal, Lexar shareholders will trade each one of their shares for .5925 of Micron stock. Micron's initial bid in March was 5.3 percent lower at an exchange ratio of .5625.

Some shareholders, including billionaire investor Carl Icahn, who owns about 6 percent of Lexar, had opposed the earlier offer saying it was insufficient. Their opposition, which included a failed attempt at a court order to block a June 2 shareholder vote, prompted Micron to sweeten the proposal at the last moment and postpone the vote for two weeks.

It was unclear Friday if the higher bid changed Icahn's mind. He did not return a call for comment.

Micron, whose board supported the acquisition, needed the majority vote by Lexar investors to make it happen. The merger, which does not require Micron shareholder approval, is expected to close as soon as possible, Lexar said. The final value of the deal will be set at that time.

"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.''

Fremont, Calif.-based Lexar has struggled to make money amid tough competition and steep price cuts. The company does not make the silicon wafers that form the basis for NAND flash memory and has relied on subcontractors, including competitors, to supply the guts for many of its products.

Shares of Micron gained 31 cents, or almost 2 percent, to close at $16.35 on the New York Stock Exchange. Lexar's stock rose 18 cents, or almost 2 percent, to finish at $9.61 on the Nasdaq Stock Market.

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