October is the month for major acquisitions apparently. Last week Dell acquired EMC for $67 billion in what amounted to the largest tech merger in history, or the largest so far. In slightly smaller announcements, Imation acquired Connected data and Western Digital was granted permission to further integrate HGST into WD. Today marks the second major acquisition announcement of the month with Western Digital announcing that it is acquiring SanDisk, something we had speculated last week.
October is the month for major acquisitions apparently. Last week Dell acquired EMC for $67 billion in what amounted to the largest tech merger in history, or the largest so far. In slightly smaller announcements, Imation acquired Connected data and Western Digital was granted permission to further integrate HGST into WD. Today marks the second major acquisition announcement of the month with Western Digital announcing that it is acquiring SanDisk, something we had speculated last week.
WD will acquire SanDisk for around $19 Billion in a combination of cash and stock. At the moment estimates have WD paying $85.10 per share in cash and 0.0176 shares of Western Digital common stock per share of SanDisk common stock, that is assuming the investment by Unisplendour Corporation Limited closes prior to acquisition. If the investment hasn’t closed then WD will pay $67.50 in cash and 0.2387 shares of Western Digital common stock per share of SanDisk common stock. Both companies’ boards of directors have approved the transaction.
By adding SanDisk to Western Digital, WD gains access to SanDisk’s 27 years of innovation and expertise in NVM, systems solutions, and manufacturing. Not only does this acquisition bring NAND and NVM technology to WD, it also doubles the addressable market while expanding WD’s participation in higher-growth segments. Both companies have complimentary product lines, which will lead to broader products and technologies down the road. Between WD and SanDisk there are over 15,000 patents issued or pending and strong R&D and engineering capabilities.
As we previously mentioned, “Toshiba hasn't been associated with these rumors, who would have to agree to the deal in some form anyway due to the fab deal in place with SanDisk.” WD also announced that their joint venture with Toshiba will be ongoing. That means WD will now have the same access to Toshiba’s NAND supply and technology such as 3D NAND.
WD’s CEO, Steve Milligan, will continue in his role. SanDisk’s CEO, Sanjay Mehrotra, will be joining the Western Digital Board of Directors.
BofA Merrill Lynch and J.P. Morgan are acting as lead financial advisors to Western Digital and will provide committed financing for the transaction. Also, Credit Suisse is acting as a financial advisor and providing committed financing, and RBC Capital Markets is providing committed financing. Cleary Gottlieb Steen & Hamilton LLP and Baker & McKenzie are acting as legal advisors to Western Digital. Goldman Sachs is acting as the exclusive financial advisor to SanDisk. Skadden, Arps, Slate, Meagher & Flom LLP is acting as the exclusive legal advisor to SanDisk.
Western Digital will continue paying its quarterly dividend however it plans to suspend its share buyback program. The transaction is expected to close in the third calendar quarter of 2016.
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