Micron Technology Inc, the biggest U. S. producer of computer memory, is planning to acquire Numonyx, the world's No. 3 maker of flash-type memory chips. Micron said this on Tuesday in an all-stock deal of about $1.27 billion.

According to this agreement, Micron common shares to Numonyx shareholders, Intel, STMicroelectronics, and Francisco Partners of 140 million will be offered. Based on the average of the price of shares, additional 10 million Micron common shares could be issued.

On a conference call, Micron Chief Executive Steve Appleton said, “The deal helps further diversify Micron's business amid the growing mobile device market as smartphone memory needs grow, and lower-end cellphones with smaller memory become more ubiquitous in the developing world. We think we will clearly be the second-largest producer of memory. Obviously Samsung's still very strong, but we will start differentiating ourselves even more from the rest of those in the industry”.

Numonyx has suffered due to downturns but now it expects to return back to profitability. Before announcement on Nasqad, Micron shares closed up 1.9% at $9.08.

The ownership will add to cash flow and profit which go into mobile phones and it will enable Micron to acquire Numonyx’s Nor-type flash chips. Micron’s stock is expected to rise by 16% following the agreement after a dip of 14% last year.