Western Digital Corporation and SanDisk Corporation have announced that they have reached a definitive agreement that will see Western Digital acquire all of SanDisk’s outstanding shares for a combination of stock and cash. This offer places a value of $86.50 on each share of SanDisk common stock, resulting in a total equity valuation of approximately $19 billion (based on a five-day volume weighted average price ending on 10-20-2015 of $79.60 per share of Western Digital common stock).
As regards a previous investment announcement in Western Digital by Unisplendor Corporation Limited, if the aforementioned investment closes prior to the SanDisk acquisition, Western Digital will pay $85.10 per share in cash and 0.0176 shares of Western Digital common stock per share of SanDisk common stock. If the Unisplendor investment has not closed or is terminated, Western Digital will pay $67.50 in cash and 0.2387 shares of Western Digital common stock for each share of SanDisk common stock. The merger has been approved by the boards of directors of both Western Digital and SanDisk, subject to expected regulatory and shareholder approvals.
This proposed combination creates significant additional value for shareholders of both SanDisk and Western Digital. Western Digital has made a number of acquisitions over recent years, allowing them to pursue higher-growth opportunities and to fuel continued innovation. China’s Ministry of Commerce (MOFCOM) recently announced a decision that allows Western Digital to integrate substantial portions of its WD and HGST businesses, which along with Western Digital’s operational excellence is anticipated to create additional cost savings.
According to Steve Milligan, CEO of Western Digital, “This transformational acquisition aligns with our long-term strategy to be an innovative leader in the storage industry by providing compelling, high-quality products with leading technology. The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry. I’m excited to welcome the SanDisk team as we look to create additional value for all of our stakeholders, including our customers, shareholders and employees.”
Western Digital and SanDisk’s product lines that complement each other, including hard-disk drives (HDDS), solid-state drives (SSDs), datacenter/cloud storage offerings and flash storage solutions, will provide a basis for a broader range of products and technologies. Both Western Digital and SanDisk have strong, experienced R&D departments and engineering capabilities, and a diverse portfolio of fundamental technologies that are covered by over 15,000 combined patents issued (and/or pending) worldwide.
Sanjay Mehrotra, president and CEO of SanDisk, observes that “Western Digital is globally recognized as a leading provider of storage solutions and has a 45-year legacy of developing and manufacturing cutting-edge solutions, making the company the ideal strategic partner for SanDisk. Importantly, this combination also creates an even stronger partner for our customers. Joining forces with Western Digital will enable the combined company to offer the broadest portfolio of industry-leading, innovative storage solutions to customers across a wide range of markets and applications.”
This acquisition will allow Western Digital to take advantage of SanDisk’s long-term strategic NAND supply partnership with Toshiba. This joint venture will be continued, providing an increased level of vertical integration that allows for a stable NAND supply at the required scale, and extends across NVM technologies and 3D NAND.
Steve Milligan will continue as CEO of the combined company, which will remain headquartered in Irvine, California. Sanjay Mehrotra is expected to join Western Digital’s board of directors once the acquisition is completed. The transaction is expected to finalize by Q3 of 2016. You can view Western Digital’s press release announcing the acquisition in its entirety here; and SanDisk’s corresponding press release here.