The news broke this morning: SanDisk (Nasdaq: SNDK) has bought Pliant Technology for $327 million. Investors are cheering, bidding up SanDisk shares 4% as of this writing ... but why?

It's not because SanDisk is getting immediately more profitable. To the contrary, SanDisk says the deal will subtract 2% to 3% from pro forma earnings this year, before beginning to pay off in 2012. It's not because SanDisk is getting a "good deal" either. So little is known about privately held Pliant that we can't even place a reliable price-to-sales, much less a price-to-earnings, valuation on the deal. In fact, all we really know about Pliant from publicly available information is that private equity has poured about $60 million into the company over the past three years -- which would seem to suggest SanDisk is paying a pretty steep price for Pliant.

Is it worth it?
So why all the excitement about this deal? In a word: Potential.

Pliant, you see, sells into a very lucrative segment of the solid-state drive space: The high end. Its "multi-level cell" NAND SSDs are said to cost more than similar products sold by Intel (Nasdaq: INTC), and compete more directly with STEC's (Nasdaq: STEC) wares. On the other hand, performance-wise they're said to compare favorably to STEC's ZeusIOPS SSDs. SanDisk cites reduced power consumption and "dramatic" increase in application performance as two key reasons why it wants to own Pliant's tech. Improving the company's position in the fast-growing enterprise SSD space relative to incumbents such as Toshiba and Micron (NYSE: MU) probably doesn't hurt, either.

Pliant also brings with it a hi-profile partner, in the form of EMC (NYSE: EMC). The company helps Pliant hawk SSDs as a faster alternative to more traditional, but slower, hard drive memory media manufactured by companies like Western Digital (NYSE: WDC) and Seagate (Nasdaq: STX).

Foolish final thought
Will all this work out for SanDisk? It's hard to say without having a better idea for Pliant's price/value proposition. What I can tell you is this: SanDisk at 9 times earnings and 8.4 times free cash flow looks remarkably cheap relative to the double-digit growth rate it was expected to achieve before buying fast-growing Pliant. If Pliant helps it to grow faster, the stock's even cheaper than it looks.

Will this deal pay off for SanDisk? Add it to your Fool Watchlist, and find out.