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Smart Modular shares soar to 52-week high on Solectron deal

Shares of Smart Modular Technologies Inc. (Nasdaq: SMOD) picked up 10 9/16, or 43 percent, to a 52-week high of 34 7/8 after Solectron agreed to buy the memory chipmaker for $1.8 billion in stock.

Under the terms of the transaction, shareholders of Fremont, Calif.-based Smart Modular will receive 0.51 shares of Solectron stock for each share of SMART stock.

Solectron said it will issue about 23.1 million shares of Solectron common stock and assume all stock options held by Smart employees.

Solectron said the deal will allow it to expand its services and infrastructure.

The deal values Smart Modular shares at $39.36 a share.

On Monday, Solectron beat Street estimates in its fourth quarter, earning $88.8 million, or 33 cents a share, on sales of $2.4 billion.

Solectron shares were up 7/16 to 74 3/16 Tuesday.

Solectron officials said it expects the transaction to boost fiscal 2000 earnings by about 9 cents a share before transaction charges.

CS First Boston on Tuesday raised its fiscal 2000 estimate to $1.69 a share from $1.50 and raised its price target for the company to $90 from $70.

Lehman Brothers raised its fiscal 2000 estimate to $1.60 a share from $1.48 a share and established a fiscal 2001 estimate of $2.05 a share.

Smart Modular shares fell to a 52-week low of 12 3/8 in April.

Seven of the eight analysts following the stock maintain either a "buy" or "strong buy" recommendation.

Reuters contributed to this report.