Western Digital To Buy SanDisk In $19 Bln Cash, Stock Deal

(RTTNews) - Hard disk drive manufacturer Western Digital Corp. (WDC) and flash storage solutions provider SanDisk Corp. (SNDK) have entered into a definitive agreement for Western Digital to acquire all outstanding shares of SanDisk in a cash and stock deal with a total equity value of about $19 billion.

The offer values SanDisk common stock at $86.50 per share, using a five-day volume weighted average price ending on October 20 of $79.60 per share of Western Digital common stock. The transaction has been approved by the boards of directors of both companies.

If the previously announced investment in Western Digital by Unisplendour Corporation Limited closes before 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.

If the Unisplendour transaction has not closed or has been terminated, Western Digital will pay $67.50 in cash and 0.2387 shares of Western Digital common stock per share of SanDisk common stock.

Western Digital said the combination is the next step in the transformation of the company into a storage solutions company with global scale, extensive product and technology assets, and deep expertise in non-volatile memory.

With this transaction, Western Digital will double its market and expand its participation in higher-growth segments. The combination also enables Western Digital to vertically integrate into NAND.

Steve Milligan, chief executive officer of Western Digital, will continue to serve as chief executive officer of the combined company. The firm will remain headquartered in Irvine, California.

Upon closing, Sanjay Mehrotra, president and chief executive officer of SanDisk, is expected to join the Western Digital Board of Directors.

Separately, Western Digital reported first-quarter net income of $283 million, or $1.21 per share on revenue of $3.4 billion. On an adjusted basis, net income was $366 million, or $1.56 per share.

On average, 24 analysts polled by Thomson Reuters expected earnings of $1.56 per share for the quarter. Analysts' estimates typically exclude special items. Analysts expected revenues of $3.28 billion for the quarter.

Meanwhile, SanDisk reported third-quarter results that beat estimates.

Net income was $133 million, or $0.65 per share, compared to net income of $263 million, or $1.09 per share, in the previous year.

Adjusted earnings totaled $1.09 per share, while it was $1.45 per share last year. Revenue dropped to $1.452 billion from $1.746 billion in the prior year. Analysts had expected the company to earn $0.80 per share on revenues of $1.40 billion.

Further, SanDisk said that due to the pending acquisition by Western Digital, SanDisk's capital return program, consisting of quarterly cash dividend and share repurchases, is suspended effective at the start of the fourth quarter.

SNDK climbed around 3 percent in early trade to $77.25.

WDC was marginally higher in early trade at $75.