Western Digital to buy rival SanDisk in $19bn takeover

Hard-disk drive maker Western Digital said it would buy SanDisk for about $19 billion, giving it better access to flash memory storage chips used in smartphones and mobile devices.

SanDisk’s shares rose to $78.95 in pre-market trading, well below the cash-and-stock offer price of $86.50 per share.

The semiconductor industry has seen a record number of deals this year as demand for cheaper chips and products to power Internet-connected gadgets push technology companies to consolidate suppliers.

The value of the SanDisk acquisition depends on the closing of an investment from Unisplendour, a unit of China's state-backed Tsinghua Holdings, in Western Digital.

If the Unisplendour investment closes before the SanDisk acquisition, Western Digital will pay $85.10 per share in cash and 0.0176 of Western Digital shares for each SanDisk share held, the companies said on Wednesday.

However, if the investment does not close or is terminated, Western Digital will pay $67.50 in cash and 0.2387 shares of Western Digital common stock per share of SanDisk common stock.

The deal is expected to add to Western Digital’s adjusted earnings within the first 12 months of its closing.

Western Digital’s shares were down 2.8 per cent at $72.75 in premarket trading.

Reuters