Samsung Withdraws Generous Bid for SanDisk

Flash memory provider Samsung said Oct. 22 it has withdrawn its $26-per-share bid to acquire innovative but struggling NAND flash maker SanDisk.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

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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."