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NEW YORK (TheStreet) –– Shares of flash memory storage company Fusion-IO (FIO)  surged after the company agreed to be acquired by memory giant SanDisk (SNDK) for $1.1 billion in cash.

"Fusion-io 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 the press release. "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."

"This transaction represents a compelling opportunity for Fusion-io's employees, customers and shareholders," said Shane Robison, chairman and CEO of Fusion-io. "Fusion-io's innovative hardware and software solutions will be augmented by SanDisk's worldwide scale and vertical integration, enabling a combined company that can offer an even more compelling value proposition for customers and partners."

SanDisk will start a tender offer for all outstanding shares of Salt Lake City-based Fusion-io for $11.25 a share in cash, with SanDisk funding the acquisition with cash available on its balance sheet. The transaction has been approved by the boardsof both companies. It's expected that the transaction will close in the third quarter of SanDisk's fiscal 2014, and will start to be accretive on a non-GAAP basis to SanDisk in the second half of fiscal 2015.

In premarket trading on Monday, shares of Fusion-io surged 25.7% to $11.66, firmly above the offer price, indicating traders may be betting on a bid from another memory storage company.

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Last week, TheStreet had interviewed Fusion-io President and Chief Operating Lance Smith about the continued merger speculation surrounding the company.

"That chatter is certainly not new, and is driven because of the consolidation in the market and we are the leading provider of integrated flash-based application acceleration, and we are seeing a lot of the market validate our strategy and view of the opportunity," Smith said at the time.

Fusion-io Q&A: Apple, Facebook, Merger Speculation

-- Written by Chris Ciaccia in New York

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