(RTTNews) -  Memory chipmaker Micron Technology, Inc. (MU: News ) announced Tuesday that it has agreed to acquire privately held rival Numonyx Holdings B.V. in an all-stock transaction valuing Numonyx at about US$1.27 billion. The combination will broaden the memory chips product portfolio of Micron and expand its manufacturing and development scale as well as increase its customer reach.

The board of directors and supervisory board of Micron have approved the deal, while the deal is not subject to Micron stockholder approval. The transaction, which is subject to regulatory review and other customary closing conditions, is currently expected to close within three to six months.

Numonyx is an independent semiconductor company providing mainly flash memory solutions and was formed in March 2008 as a flash memory joint venture between Geneva, Switzerland-based STMicroelectronics N.V. (STM: News ) with a 48.6% stake, Intel Corp. (INTC: News ), and independent global equity firm Francisco Partners. Numonyx is the premier non-volatile memory innovator and was the flash memory business of STMicroelectronics before evolving into the joint-venture.

The proposed deal is expected to help Micron replace Hynix Semiconductor as the second biggest player in the memory chip market and position itself closely behind market leader Samsung.

The deal is expected to help strengthen Micron's position as one of the world's leading memory companies, with a broad portfolio of DRAM, NAND and NOR memory products as well as strong expertise in developing and supporting memory system solutions. Micron would also gain access to Numonyx's customer base, and increased manufacturing scale globally. Additionally, Micron would be able to increase its multi-chip offerings in the embedded and mobile markets.
The move comes at a time when the memory chip market is facing a severe oversupply as well as price degradation that are threatening the viability of even the major players in the industry. Like Intel and STMicroelectronics, many of the large companies have moved to exit the market or share the heavy development and manufacturing costs with partners.

Under the terms of the deal, Boise, Idaho-based Micron will issue 140 million Micron common shares to Intel, STMicroelectronics, and Francisco Partners. Micron will also issue up to 10 million additional Micron common shares to Numonyx shareholders, on a pro rata basis, if the volume weighted average price of Micron's common stock for the 20 trading days, ending two days prior to closing of the deal, is between $7.00 and $9.00 per share.

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