Micron and Western Digital want SanDisk

Sandisk extreme SSDsChipmaker Micron and hard disk drive maker Western Digital are in talks with memory chip maker SanDisk about a possible acquisition.

SanDisk is valued at about $12.6 billion and has hired a bank to help with the process. No decision has been made and the talks may not result in a transaction, but things appear promising.

Shares of SanDisk rose 12 percent to $69.20 in extended trading on Tuesday. Micron was up 3 percent and Western Digital under one percent.

Micron and Western Digital are an odd couple of buyers. Micron already has a significant flash memory operation.

Western Digital mainly makes traditional hard drives. SanDisk’s flash-memory chips are used in solid-state drives, which are faster and more reliable than traditional hard drives.

In fact, many expected a Chinese conglomerate to be a more interested party to potentially acquire SanDisk. China’s government wants to step up its chip industry and has been tipped to buy SanDisk before.

Tsinghua Unigroup offered $23 billion for Micron, but the plan was been clouded by US security concerns. In the end Tsinghua invested $3.78 billion in Western Digital, worth a 15 percent stake.

Analysts have said the cash infusion could allow Western Digital to take bigger steps in flash and solid-state storage, its key interest areas.

SanDisk’s price is low. It has dropped about 37 percent year-to-date as the company dealt with falling prices in the flash memory market.

A delay in sales of certain embedded parts used in solid-state drives has also weighed on the company’s results.