Western Digital Corp agreed to buy SanDisk Corp for about $US19 billion in cash and stock, a deal that positions the company for growth in the rapidly evolving server and storage industry. SanDisk will be valued at $86.50 a share, a 15 percent jump over Tuesday’s closing price.
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Analysts have said while Western Digital is a major player in the traditional storage industry, it needs access to SanDisk’s NAND technology to better compete in the solid-state drive (SSD) market.
SanDisk just succeeded in its mission to get bought out.
Western Digital claims that this transaction will double its addressable market, and perhaps more important is that the merger is said to expand its participation in higher-growth technology segments.
Western Digital is dominant in spinning disk hard drives, which are still the go-to for large quantities of files. The news was confirmed by Western Digital itself in a hefty press release posted online today. Sanjay Mehrotra, president and CEO of SanDisk, is expected to join Western Digital’s board when the transaction closes. WDC says the combination of the two companies is the next step in its transformation into a storage solutions company with a deep product portfolio, global scale and strong experience in non-volatile memory. SanDisk’s stock jumped 5.7% to $79.50 in premarket trading.
The SanDisk deal “aligns with our long-term strategy to be an innovative leader in the storage industry by providing compelling, high-quality products with leading technology”, said Western chief executive Steve Milligan in a statement. SanDisk has been on The Deal’s Activist Watch List since spring, after the maker of flash memory drives for phones, cameras, thumb drives and other devices slashed guidance.
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The exact purchase price is liable to change based on the closing of Chinese company’s Unisplendour’s investment in Western Digital last month, according to the announcement.
