SanDisk Corporation (NASDAQ: SNDK) has received a $26 buyout offer from Samsung, and shares are soaring after the close. We would like to note that this deal may be a hostile one, and one with conditions that management might not like. We had previously noted how an offer of this sort might not be accepted.
Samsung has sent a letter to SanDisk stating that four months of meetings and discussions over a possible business combination went nowhere. It said it was deeply disappointed about SanDisk’s unrealistic expectations over a standalone market value and an appropriate merger price. Samsung reiterated that it will pay cash to acquire the company in a merger that is not subject to financing conditions.
Samsung goes on to note that mentioning the 52-week high is not at allmaterial now in a changed world. Samsung also notes that cost-cuttingwill not suffice for what SanDisk will need to invest in and fund overthe next several months as well as a NAND flash market that will takequite a bit of time to recover.
Samsung has also noted how SanDisk wanted price terms worked out firstbefore due diligence could be conducted and that it has not worked withit adequately on intellectual property. Samsung also believes that itcan get this merger cleared by regulators. This offer doesremain subject to due diligence and more.
Jon C. Ogg
September 16, 2008
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