SanDisk Corp. (NASDAQ: SNDK) has traded up most of the day on options reports from OptionMonster regarding a potential bid from Toshiba.  This was after a flurry of call options buying, but the shares have traded up as much as 19% today.  Before you dive headfirst in the dark without making sure there is water in the pool, be sure you turn on the lights or dip your toe in first.

This stock has been rumored as a buyout target in the past.  In fact,Samsung made a $26.00 conditional offer.  Samsung said that the companywould not negotiate at that price and only pointed to the 52-week highbeing far higher.  SanDisk said that it questioned the motivations ofthe bid after not hearing back.  We have said before how we questioned the likelihood of SanDisk accepting the merger long before the merger decision was made.

Even if Toshiba or another party does come into bid, SanDisk managementwill have a real hard time warming to a buyout offer right now sinceits stock has slid much more. 

This merger situation was only part of the reason in our 10 CEO’s To Gofeature for Eli Harari, although our suggestion was more of a rolechanging position to chairman rather than a call for him to leave.

It looks like the short covering move and the fast money move hasalready petered out in here.  Shares are up 14% at $8.24.  Anything ispossible and we would not be shocked if a new offer comes in, but we have seen this before. All the same skepticism in believing that management would go along with a merger here today are present.

Jon C. Ogg
December 3, 2008

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