Lexar Media shareholders back Micron's $801 million takeover bid

Lexar Media Inc. shareholders approved an $801 million takeover bid by Micron Technology Inc., rejecting efforts to block the deal by billionaire Carl Icahn and hedge fund managers who said the price was too low.

An estimated 53.1 percent of shareholders backed the deal at a meeting at Lexar's Fremont, Calif., headquarters. Micron will pay 0.5925 share of its stock for each share of Lexar, a money-losing computer-memory maker. That values Lexar at $9.69 a share, based on Friday's closing prices.

Micron, the largest U.S. maker of computer-memory chips, gains Lexar's flash-memory products and retail distribution, forming a stronger competitor to No. 1 memory-card maker SanDisk Corp. as well as Samsung Electronics Co. and Toshiba Corp. The companies overcame opposition from Icahn, who held 7.5 percent of Lexar, and other investors.

"We voted against it, but it was a close call," Icahn said Friday from his office in New York. "Because of the way the market's been acting, I'm not too upset with the outcome, and I wish both companies the best of luck."

Shares of Lexar rose 18 cents to close at $9.61 Friday on the Nasdaq Stock Market. Boise-based Micron rose 31 cents to $16.35 on the New York Stock Exchange.

Lexar's cards store digital photos and music in cameras and other portable devices using Nand flash memory, a market Micron has been slow to enter.

"It is a win-win situation for both companies," American Technology Research analyst Satya Chillara said Friday from Lexar's offices. "Lexar gets access to a Nand foundry, and Micron gets access to the huge retail distribution that Lexar built up." He rates Lexar "hold" and said he doesn't own shares.

Micron in November signaled its intent to enter the Nand memory market by forming a venture with Intel Corp. Sales of Nand memory are growing four times faster than other flash memory.

The chips are cheaper to make and can store larger music and video files. Fluctuations in the price of Micron's main product, chips for computer memory, have hurt profit, prompting the company to look to new products to expand sales.

Micron raised its bid on June 5 after investors, including Icahn and Elliott Associates LP, said Lexar was worth more. Lexar rescheduled the meeting, originally slated for June 2, to rally investor support. Lexar's largest shareholder, Glenview Management LLC, said on June 7 it supported the higher offer.

Elliott, which sold its 7.5 percent Lexar stake from June 2 to June 7, had no comment, spokesman Scott Tagliarino said today.

"I think Lexar has a tremendous opportunity as part of Micron to be stronger and more successful in the future," Lexar Chief Executive Officer Eric Stang said after the vote.

Contributing: Ari Levy; Ian King