Samsung Withdraws Generous Bid for SanDisk

By Chris Preimesberger  |  Posted 2008-10-22 Print this article Print

The move by Samsung comes only two days after longtime partners Toshiba and SanDisk announced an agreement that turns over 30 percent of SanDisk's share of current manufacturing capacity of the companies' joint ventures to Toshiba. While Samsung steamed, SanDisk banked a cool $1 billion as a result.

Flash memory provider Samsung said Oct. 22 it has withdrawn its $26-per-share bid to acquire innovative but struggling NAND flash maker SanDisk

SanDisk's common stock was trading at slightly above $10 on Oct. 22.

The move by Samsung comes a mere two days after longtime flash memory partners Toshiba and SanDisk announced an agreement that turns over 30 percent of SanDisk's share of current manufacturing capacity of the companies' joint ventures to Toshiba.

SanDisk will get equipment-leasing cost reductions and a cash infusion amounting to about $1 billion as its part of the deal.

The board of SanDisk on Sept. 17 rejected a formal bid by Samsung for a $26-per-share takeover, believing that the offer undervalued the company's substantial flash memory intellectual property portfolio.

SanDisk, with a market capitalization of $3.2 billion, has suffered along with the rest of the industry through an oversupply of NAND chips, especially those ticketed for use in servers and laptops.

Explaining that "... your shareholders would have received full, fair and certain value for their shares and your employees and other stakeholders would have benefited," Samsung gave its reasons to believe that SanDisk was errant in its expectations for the current market situation to improve in the near term.

Samsung explained that there are "growing uncertainties in your business, which may continue to deteriorate in this difficult economic environment and further impact your stand-alone value."

Samsung also noted, "Your surprise announcements of a quarter billion-dollar operating loss, a hurried renegotiation of your relationship with Toshiba and major job losses across your organization all point to a considerable increase in your risk profile."

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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