SanDisk To Acquire Smaller Peer Fusion-io In $1.1 Bln Deal

(RTTNews) - Flash memory card maker SanDisk Corp. (SNDK) agreed Monday to acquire smaller peer Fusion-io, Inc. (FIO) for $11.25 per share in an all-cash deal valued at about $1.1 billion, net of cash assumed.

The deal, which has been approved by the boards of directors of both companies, is expected to close in the third quarter of SanDisk's fiscal 2014.

"Fusion-io will accelerate our efforts to enable the flash-transformed data center, helping companies better manage increasingly heavy data workloads at a lower total cost of ownership," SanDisk President and CEO Sanjay Mehrotra said in a statement.

Salt Lake, Utah-based Fusion-io is a leading developer of flash-based PCIe hardware and software solutions that enhance application performance in enterprise and hyperscale datacenters.

Milpitas, California-based SanDisk makes removable cards, embedded flash products, USB flash drives and solid-state drives used in place of hard disk drives.

The offer price of $11.25 per share represents a 21.2 percent premium over Fusion-io's closing stock price of $9.28 on Friday.

However, Fusion-io shares are surging more than 25 percent in early deals on Monday to indicate that shareholders are expecting a better deal.

SanDisk said it will fund the deal with cash available on its balance sheet. The deal is expected to accretive to SanDisk's adjusted earnings in the second half of fiscal 2015.

"Customers will benefit from the addition of Fusion-io's leading PCIe solutions to SanDisk's vertically integrated business model. We look forward to working with the world-class engineering and go-to-market teams from Fusion-io to provide high-value solutions to customers around the world," Mehrotra added.

Goldman Sachs & Co. (GS) acted as financial adviser to SanDisk, while Skadden, Arps Slate, Meagher & Flom LLP was the legal adviser. Meanwhile, Qatalyst Partners acted as financial advisor and Wilson Sonsini Goodrich & Rosati acted as legal advisor to Fusion-io.

SNDK closed Friday's regular trading session at $98.47, down $0.83 on a volume of 2.27 million shares, while FIO closed at $9.26, up $0.08 on a volume of 3.22 million shares.