14 DAY TRIAL // Not very long ago, we informed you about Samsung's intentions to acquire SanDisk, a leading manufacturer of flash-based memory products. Back then, no type of feedback came from SanDisk, while the exact details of a possible acquisition weren't available. However, it appears that the Taiwan-based company has now officially and publicly expressed its intentions of acquiring American firm SanDisk for a price tag of $26 per share for a total of $5.8 billion.
What is even more interesting is that SanDisk has already issued an answer to Samsung's proposal, clearly expressing the rejection of the $5.8 billion acquisition offer. According to SanDisk, the offer undervalues the company and “does not reflect the value of the substantial synergies that Samsung can attain from an acquisition of SanDisk.”
Chairman of the Board of SanDisk and Chief Executive Officer Eli Harari commented, “We believe Samsung’s proposal does not provide appropriate value to our stockholders and is opportunistically timed at the trough of an industry-wide downturn. In our view, this proposal fails to recognize the value of our patent portfolio, in particular to Samsung, our significant investments in our strategic partnerships, and our technology leadership in 3 and 4 bits per cell flash memory, advanced controllers and three dimensional (3D) semiconductor memory. We believe we have the strategy, execution record, innovation and financial resources to return to profitable growth and be the flash memory leader in new growth markets in mobile devices, solid state disk, and portable consumer electronics.”
According to Samsung, the $26 per share offer would bring to the shareholders of the memory company an immediate cash premium of 93%, over SanDisk's closing share price on September 4. As it happens, this date coincides with the one when the first media reports on the subject surfaced. In addition, Samsung has also declared that the offered price tag could also bring a premium of 80% over the closing share price on September 15.
Furthermore, Samsung argues that the “world has changed dramatically in the past 52 weeks as can be seen from SanDisk’s own disappointing results.” In addition, the firm also claims that “it will take the NAND flash market quite a bit to recover,” which means that SanDisk will need to come out with significant funding in order to remain competitive.
It is clear that Samsung is trying to benefit from the current market situation, and is putting pressure on SanDisk, a company that also happens to be one of its close collaborators.