| Rival flash memory pioneers merge |
Jul. 30, 2006
  Two flash memory pioneers and technology innovators will soon merge, with the acquisition of M-Systems of Kfar Saba, Israel, by SanDisk of Milpitas, Calif. The deal will be an all stock transaction valued at $1.55 billion, the companies announced July 30.
SanDisk was the originator of CompactFlash, while M-Systems spawned a broad array of "flash disk" module formats and form-factors, including the highly popular DiskOnChip. SanDisk's CompactFlash technology was unique, in that the flash cards contained a microprocessor that offloaded all flash memory management chores, such as critical wear leveling requirements, from the host processor. M-Systems, meanwhile, opted for flash media approaches that were directly controlled by the host processor, and innovated in the area of host processor-controlled flash-filesystem technology.
SanDisk's early approach offered the advantages of being operating system-independent, and being well suited for use as removable solid-state media. M-Systems's early approach, on the other hand, provided cost benefits by eliminating the need for a dedicated microcontroller and associated components to control the reading/writing of the flash memory. Ultimately, the market has accepted both formats, using each technology to satisfy differing system requirements.
 Another M-Systems flash memory innovation, introduced in 2000, was the now widely popular "USB key" flash device (aka "thumb drive"), originally dubbed the "DiskOnKey" by M-Systems (pictured at right).
SanDisk Chairman and CEO Eli Harari stated, "SanDisk and M-Systems, over the past 18 years, have been leading innovators in the flash storage market. This strategic acquisition will give us the critical mass and complementary products, customers, channels, technology and manufacturing base to take our shared vision to the next level. The NAND flash data storage business is in its early stages and we believe the market opportunity is largely untapped."
M-Systems President and CEO Dov Moran, stated, "We are truly proud of our achievements to date. This strategic deal will enable us to continue supporting our OEM customers, to whom we remain fully committed, and strengthen our innovation and product offering with SanDisk's leading edge, low-cost fab capacity. This deal has synergy at its core, encompassing people, technology, products and customers. Based on our shared vision, as well as our teams' history of successful and fruitful cooperation, I am confident we can succeed in achieving the goals we set for ourselves. I also believe that SanDisk's extensive silicon expertise will prove itself as a strong catalyst to productizing our revolutionary x4 technology as well as other future innovations."
According to the acquisition announcement, each M-Systems ordinary share will be converted into 0.76368 of a share of SanDisk common stock, representing a 26 percent premium over the average closing price of M-Systems shares for the last thirty trading days. The transaction, which is subject to Israeli court approval, regulatory approval, and M-Systems shareholder approval, is expected to close in the fourth quarter of 2006, the companies say.
M-Systems, founded in 1989, reported that its revenue in 2005 was $615 million. SanDisk, founded in 1988, reported 2005 revenue in excess of $2.3 billion.
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