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Micron Technology on Friday upped its bid for fellow memory chip maker Lexar Media heading off a possible rejection of its takeover at a special meeting of Lexar shareholders.

Carl Icahn, the bilionaire investor, is one of a number of shareholders opposing the deal, believing Micron’s original offer in March of $688m, based on a share exchange, was insufficient. Last week he raised his stake in Lexar from 6 per cent to 7.5 per cent.

Micron said on Friday it was prepared to increase the exchange ratio from 0.5625 Micron shares for each Lexar one to 0.5925. This would value the offer at $826.5m based on Thursday’s closing share prices.

Lexar’s board, which supports the takeover, immediately announced it was adjourning the special meeting of stockholders due to take place the same day. They will now have two more weeks to consider the deal.

Lexar said those that had voted prior to the meeting could change their vote if they wished.

The other main opponent of the deal is Elliott Associates, a hedge fund which also holds 7.5 per cent of the shares. Other hedge funds invested in Lexar are also reported to have deemed Micron’s offer as too low.

However, the deal won support from proxy advisory firms Institutional Shareholder Services and Proxy Governance. The latter said that, according to its analysis, the pricing seemed reasonable, market analysts were supportive of the deal, and the company had conducted an extensive auction process.

Micron, based in Boise, Idaho is seeking to boost its presence in consumer electronics with the acquisition. It has been traditionally a memory chip maker focused on Dynamic Random Access Memory (Dram) chips for PCs but it has moved into other areas in recent years.

It has become a major provider of CMOS imaging chips used in camera phones and has launched a joint venture with Intel to produce Nand Flash memory, also featured in cellphones.

Silicon Valley-based Lexar makes memory cards for cellphones and digital cameras.

Lexar shares were down 3.3 per cent in midday trading in New York on Friday at $9.60 and Micron’s fell 2.8 per cent to $16.39.

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