SanDisk will be valued at $86.50 a share, a 15 percent jump over Tuesday’s closing price.
Advertisement
On Wednesday, Western Digital announced that it has agreed to acquire SanDisk for $19 million. “Western Digital will double its addressable market and expand its participation in higher-growth segments”.
The acquisition will not affect a 15-year partnership between SanDisk and Toshiba, which jointly manufacture NAND flash chips.
The value of the deal depends on the closing of an investment from Unisplendour, a unit of China’s state-backed Tsinghua Holdings, in Western Digital.
SanDisk just succeeded in its mission to get bought out. It plans to enter a debt of $18.4 billion, including $1 billion of revolving credit, for the purchase.
Of course a deal of this magnitude isn’t going to be completed immediately.
The new company is to be positioned ideally to capture the growth opportunities that are created by the rapidly evolving storage sector. BofA Merrill Lynch and JP Morgan are lead financial advisers and Credit Suisse is also advising Western Digital. It still needs approval from SanDisk shareholders.
Advertisement
Steve Milligan, chief executive officer of Western Digital, will continue to serve as chief executive officer of the combined company. NAND flash technology is found on USB flash drives, memory cards and MP3 Players, all of which are products that SanDisk has developed, and that kind of technology could be used in building solid-state drives (SSD) that are used in a few laptops, data centers, cloud computing and it could be used in a few mobile products. “The transaction is expected to be EPS accretive on a non-GAAP basis within 12 months of the transaction close”. The vast experience of the firm in non-volatile memory (NVM) is expected to help Western Digital achieve its target of becoming a storage solutions company with a global scale and technologically advanced products.
