Western Digital is expanding in the storage market with the acquisition of memory card maker SanDisk for USD 19 billion. The company agreed to buy SanDisk for USD 86.50 per share in a combination of cash and WD shares. The price depends on an earlier agreement for Unisplendour Corp to invest in WD. If that deal goes ahead first, WD will pay USD 85.10 per share in cash and 0.0176 shares per share of SanDisk, and if the Unisplendour transaction has not closed, USD 67.50 in cash and 0.2387 shares.
Western Digital said the takeover will double its addressable market and expand its position in higher-growth segments. The combination also enables Western Digital to vertically integrate into NAND, giving it long-term access to solid state technology at lower cost. The company said it would maintain SanDisk’s manufacturing joint venture with Toshiba after the takeover.
The company expects to achieve annual synergies of USD 500 million from integrating SanDisk, within 18 months of closing the takeover, and the deal should add to EPS, excluding one-time costs, within 12 months. To help finance the acquisition, Western Digital is suspending its share buyback program and has agreed USD 18.4 billion in fresh debt.
SanDisk’s board supports the takeover, while its shareholders will have the final say. Pending shareholder and regulatory approval, the takeover is expected to close in Q3 2016. Sandisk reported separately its third-quarter results, showing revenue down 17 percent year-on-year and up 17 percent sequentially to USD 1.45 billion. Net profit nearly halved to USD 133 million from USD 263 million a year ago.