SanDisk Corp is buying Fusion-io Inc for about $1.1 billion to bulk up its flash storage business and reduce its exposure to the volatile memory chip market.
SanDisk's offer of $11.25 per share represents a premium of 21 percent to Fusion-io's Friday close.
Fusion-io's shares were trading at $11.61 before the bell on Monday, suggesting that some investors were expecting a higher offer for the company.
SanDisk's NAND flash memory chips are widely used in smartphones, cameras and other mobile devices to store music, pictures and other data.
But the company is increasingly using its chips to build and sell its own solid-state drives, which offer higher profit margins, to companies and consumers.
SanDisk's revenue from solid-state drives, or SSDs, jumped 61 percent in the first quarter, accounting for 28 percent of revenue.
The deal also makes the company less vulnerable to dramatic swings in prices of memory chips that have historically plagued the industry.
Fusion-io, which employs Apple co-founder Steve Wozniak as its chief scientist, has reported a loss for five quarters in a row.
SanDisk said it expects the deal, likely to close in the third quarter, to add to its adjusted profit in the second half of 2015.Get your daily dose of tech news, reviews, and insights, in under 80 characters on Gadgets 360 Turbo. Connect with fellow tech lovers on our Forum. Follow us on X, Facebook, WhatsApp, Threads and Google News for instant updates. Catch all the action on our YouTube channel.