Micron ( MU) will acquire Lexar ( LEXR) for stock worth around $688 million, expanding its products in the market for a popular variety of flash memory. Micron will issue 0.5625 shares for each Lexar share outstanding, valuing Lexar at $8.43 a share based on Tuesday night's close. In premarket trading Wednesday, Lexar was up $1.03, or 14.5%, to $8.12. Micron's stock fell 40 cents, or 2.7%, to $14.58. The acquisition is a play on NAND flash, a type of memory that retains data even when its power supply is cut off. Lexar's patent portfolio is centered on controller and system design within the NAND category, technology that should complement Micron's manufacturing and marketing muscle. "With this acquisition, Micron will have a complete package of NAND memory solutions for our customers," Micron said. "Together with our NAND designs, technology, manufacturing capability and distribution channels, Micron is in a strong position to serve the flash storage requirements of consumer electronics and enterprise customers." The need for scale in the NAND space was evident last month when Lexar said it would report an unexpected fourth-quarter loss. The company saw its margins crunched after competitor SanDisk ( SNDK) announced a 35% price reduction for its NAND products. The transaction is subject to regulatory review, Lexar stockholder approval and other customary closing conditions. Completion of the merger is expected by the end of the third calendar quarter.