SanDisk (SNDK) Inks $1.1B Deal to Buy Fusion-io (FIO)

Shares of Fusion-IO (FIO) spiked more than 22% Monday morning on news flash memory maker SanDisk Corporation (SNDK) is buying the company in an all-cash deal worth about $1.1 billion.

SanDisk has agreed to pay Fusion-io $11.25 per share, a premium of 21% to Fusion-io’s closing price on June 13, and expects the deal will add to its adjusted EPS in the second half of FY2015. The transaction, which has been approved by the boards of directors of both companies, is expected to be completed in the third quarter of FY2014.

“Fusion-io [a developer of flash-based hardware and software for enterprise data centers] 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,” said Sanjay Mehrotra, SanDisk president and CEO in a statement. “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.”

Sterne Agee’s senior research analyst Vijay Rakesh said [via IBO] the “deal will provide SanDisk with a blue-chip customer base, enterprise vertical integration and a road map to higher gross profit margins.” Rakesh has a “Buy” rating on SNDK and a price target of $105 per share.

Fusion-io’s key customers last year were Apple (AAPL) and Facebook (FB), which combined for 44% of revenue, Rakesh said in a report.

Fusion-io jumped more than 23% to $11.42 following the merger announcement, and shares of SanDisk are up 3.25% to $101.67 in recent trade.

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