Western Digital Buying SanDisk in Deal Worth About $19B

21 Oct 2015 | Author: | No comments yet »

Western Digital Agrees To Buy SanDisk For $19 Billion.

IRVINE, Calif. – Western Digital, a maker of hard drives for businesses and personal computers, is buying SanDisk in a cash-and-stock deal worth about $19 billion as it looks to extend its reach in the storage industry.

• Western Digital will have to pay between $67.50 and $85.10 per share in cash and between 0.0176 and 0.2387 of its common stock to each SanDisk common stock, depending on whether China’s Unisplendour invests in it • The deal is expected to add to Western Digital’s adjusted earnings within the first 12 months of closing The acquisition will give Western Digital better access to flash memory chips used in smartphones; the final v… Western Digital and flash-memory chip maker SanDisk said that they have complementary product lines, including hard disk drives, solid-state drives, cloud datacenter storage solutions and flash storage solutions. “The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry,” Western Digital CEO Steve Milligan said in a written statement. The semiconductor industry has seen a record number of deals this year as demand for cheaper chips and products to power internet-connected gadgets push technology companies to consolidate suppliers. The final value of the SanDisk acquisition depends on the closing of an investment from Unisplendour, a unit of China’s state-backed Tsinghua Holdings, in Western Digital.

According to reports, the deal values SanDisk at $86.50 a share, which is a 15% premium on the previous day’s closing price, giving the company a value of $15.4 billion. The market for Nand flash chips, where SanDisk in combination with joint venture partner Toshiba Corp. was the largest producer, rose to $28.9 billion in 2014.

Western Digital may be using part of the proceeds from Tsinghua University’s agreement to invest $3.8 billion in the company, announced in September. The move by the Chinese state-run government entity was a further demonstration of that country’s determination to acquire US technology to help it replace component imports. That drive has helped fuel a record year for semiconductor mergers and acquisitions as companies get together to acquire scale in a slowing market where costs continue to go up.

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