SanDisk rejects $5.85 billion buyout offer from Samsung, Samsung gets more vocal about the deal
Samsung-SanDisk deal is some what similar to Microsoft-Yahoo deal. Just as MS was trying hard to convince Yahoo that the price which it was offering was fair enough, Samsung is really trying hard to convince SanDisk’s management that $26 a share is pretty good amount considering all aspects. But SanDisk, the world’s largest supplier of flash storage card products, rejected Sammy’s offer as it “significantly undervalues SanDisk given the long-term prospects of its business.” One of the main reason why SanDisk rejected Samsung’s offer is that the price which Sammy is willing to offer is almost 55% discount to it’s 52-week high price. SanDisk believes that it is an “opportunistic attempt to take advantage of SanDisk’s current stock price, which is significantly depressed given industry cyclicality, the uncertainty resulting from the unresolved patent cross license agreement renewal with Samsung, and general equity market conditions.”
In it’s reply Samsung said that its deeply disappointed that after four months of discussions and meetings SanDisk continues to cling to unrealistic expectations on both its standalone market value and an appropriate merger price.
Answering to SanDisk’s question related to it’s 52-week high price Samsung said that “the world has changed dramatically in the past 52 weeks as can be seen from SanDisk’s own disappointing results. Consumer spending and the overall economic situation have been getting worse. It will take the NAND flash market quite a bit of time to recover. Notwithstanding the current market conditions, to stay competitive, SanDisk will need to fund critical investment and development over the next several months – cost cutting alone will not suffice. Our offer insulates your shareholders from the risk of market conditions that have severely deteriorated and are expected to remain challenging. As highlighted above, we strongly believe that there is significant execution risk of achieving any stand-alone plan.”
