Memory maker SanDisk (NASDAQ: SNDK) announced last night that it reached a settlement to a long-standing patent dispute with rival memory maker, Hynix, sending shares up over 3 percent in mid-day trading on Wednesday.

Shares of the memory maker rose 3.51 percent, gaining $1.47 to $43.38 on the Nasdaq.

The companies signed a memorandum of understanding outlining a joint venture between the two firms to develop memory components and sell NAND memory system solutions. The agreement could make for substantial material upsides for both firms.

We estimate Hynix could add $50-$100 million in annual royalty revenue ($0.15-$0.30 a share to the bottom line) to SanDisk, analyst Doug Freedman of American Technology Research told clients in a note this morning.

This supports our Buy rating and $50 target price [for SanDisk] given the high margin contribution from royalties and impact on valuation, Freedman concluded.