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Guru3D.com » News » Western Digital Buys SanDisk for $19 Billion

Western Digital Buys SanDisk for $19 Billion

by Hilbert Hagedoorn on: 10/21/2015 03:16 PM | source: | 13 comment(s)
Western Digital Buys SanDisk for $19 Billion

We mentioned the rumor a couple of days ago already, WD is purchasing SanDisk. WD  and SanDisk Corporation today announced that they have entered into a definitive agreement under which Western Digital will acquire all outstanding shares of SanDisk.

The offer values SanDisk common stock at $86.50 per share or a total equity value of approximately $19 billion, using a five-day volume weighted average price ending on October 20, 2015 of $79.60 per share of Western Digital common stock. If the previously announced investment in Western Digital by Unisplendour Corporation Limited closes prior to this 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; and if the Unisplendour transaction has not closed or has been terminated, $67.50 in cash and 0.2387 shares of Western Digital common stock per share of SanDisk common stock. The transaction has been approved by the boards of directors of both companies.

The combination is the next step in the transformation of Western Digital into a storage solutions company with global scale, extensive product and technology assets, and deep expertise in non-volatile memory (NVM). With this transaction, Western Digital will double its addressable market and expand its participation in higher-growth segments. SanDisk brings a 27-year history of innovation and expertise in NVM, systems solutions and manufacturing. The combination also enables Western Digital to vertically integrate into NAND, securing long-term access to solid state technology at lower cost.

The proposed combination creates significant value for both SanDisk and Western Digital shareholders. Western Digital brings a successful track record of M&A with a number of acquisitions over the last several years helping to fuel innovation, create value and strongly position the company to capture higher-growth opportunities. In addition, Western Digital's operational excellence, coupled with the recently announced decision by China's Ministry of Commerce (MOFCOM) allowing Western Digital to integrate substantial portions of its WD and HGST businesses, is expected to generate additional cost synergies.

"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," said Steve Milligan, chief executive officer, Western Digital. "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 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," said Sanjay Mehrotra, president and chief executive officer, 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."

Western Digital and SanDisk's complementary product lines, including hard disk drives ("HDDs"), solid-state drives ("SSDs"), cloud datacenter storage solutions and flash storage solutions, will provide the foundation for a broader set of products and technologies from consumer to datacenter. Both companies have strong R&D and engineering capabilities and a rich base of fundamental technologies with over 15,000 combined patents issued or pending worldwide.

Toshiba has been a long-term strategic partner to SanDisk for 15 years. The joint venture (JV) with Toshiba will be ongoing, enabling vertical integration through a technology partnership driven by deep collaboration across design and process capabilities. The JV provides stable NAND supply at scale through a time-tested business model and extends across NVM technologies such as 3D NAND. 

Steve Milligan will continue to serve as chief executive officer of the combined company, and the company will remain headquartered in Irvine, California. Upon closing, Sanjay Mehrotra is expected to join the Western Digital Board of Directors.

Led by a seasoned management team, Western Digital has a strong track record of integrating acquisitions to create value. The company expects to achieve full annual run-rate synergies of $500 million within 18 months post-closing. The transaction is expected to be EPS accretive on a non-GAAP basis within 12 months of the transaction close. Pending the closing of the transaction, Western Digital expects to continue paying its quarterly dividend and plans to suspend its share buyback program.

The transaction will be financed by a mix of cash, new debt financing and Western Digital stock. In connection with the transaction, Western Digital expects to enter into new debt facilities totaling $18.4 billion, including a $1.0 billion revolving credit facility. The proceeds from the new debt facilities are expected to be used to pay part of the purchase price, refinance existing debt of Western Digital and SanDisk and pay transaction related fees and expenses. If SanDisk's cash balance falls below certain thresholds at the time of transaction close, the merger agreement provides for an adjustment to the mix of cash and stock consideration.

The transaction is subject to approval by SanDisk shareholders and, in the event that the Unisplendor transaction does not close, Western Digital shareholders, receipt of regulatory approvals and other customary closing conditions. The transaction is expected to close in the third calendar quarter of 2016.

BofA Merrill Lynch and J.P. Morgan are acting as lead financial advisors to Western Digital and will provide committed financing for the transaction. Also, Credit Suisse is acting as a financial advisor and providing committed financing, and RBC Capital Markets is providing committed financing. Cleary Gottlieb Steen & Hamilton LLP and Baker & McKenzie are acting as legal advisors to Western Digital.

Goldman Sachs is acting as the exclusive financial advisor to SanDisk. Skadden, Arps, Slate, Meagher & Flom LLP is acting as the exclusive legal advisor to SanDisk.







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RzrTrek
Senior Member



Posts: 2525
Joined: 2012-04-16

#5176072 Posted on: 10/21/2015 08:50 PM
It's probably for the best, never cared much for Sandisk anyways.

gUNN1993
Senior Member



Posts: 261
Joined: 2013-11-21

#5176171 Posted on: 10/22/2015 12:46 AM
Only thing I can say about them is they're the cheapest on the market, got a 480 GB one for 97 quid

Neo Cyrus
Senior Member



Posts: 9607
Joined: 2006-02-14

#5176198 Posted on: 10/22/2015 02:50 AM
Less competition and higher prices, yay!

Seagate's standard tier 3.5" 2TB drives (OEM, no box/cable) are on sale for $92 now at a local shop. Less than a year after 2TB had just hit the market I bought 2TB Seagate drives (which were the equivalent tier to this current model) for $70 a piece at that same store.

I said it when the flood happened, the prices are never going back down. How long has it been? And yes, WD, etc, have all kept their prices bloated.

At this rate SSD prices are eventually going to catch up.

go4brendon
Senior Member



Posts: 149
Joined: 2015-01-16

#5176296 Posted on: 10/22/2015 10:57 AM
Less competition and higher prices, yay!

Seagate's standard tier 3.5" 2TB drives (OEM, no box/cable) are on sale for $92 now at a local shop. Less than a year after 2TB had just hit the market I bought 2TB Seagate drives (which were the equivalent tier to this current model) for $70 a piece at that same store.

I said it when the flood happened, the prices are never back going down. How long has it been? And yes, WD, etc, have all kept their prices bloated.

At this rate SSD prices are eventually going to catch up.

Yea and WD make terrible drives anyway, their WD Green drives are terrible, replaced so many I've lost count. Hope Sandisk dont get compromised in quality.

Undying
Senior Member



Posts: 14574
Joined: 2008-08-28

#5176305 Posted on: 10/22/2015 11:12 AM
Yea and WD make terrible drives anyway, their WD Green drives are terrible, replaced so many I've lost count. Hope Sandisk dont get compromised in quality.


I never had problems with WD. Ofc i was using only Blacks for a long time, still working. Have no clue about others.

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