Samsung launches $6bn hostile bid for SanDisk

 

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By Barry Collins

Posted on 17 Sep 2008 at 08:45

Samsung has launched a hostile bid for memory maker SanDisk after negotiations between the two companies broke down.

SanDisk last night rejected Samsung's "unsolicited" $26 per share bid for the storage firm, describing it as "inadequate in multiple respects and not in the best interests of SanDisk's stockholders".

Samsung has countered this morning by publicly "reiterating its proposal to acquire SanDisk for $26 per share in cash," which values the company at $5.85bn.

Samsung claims it's been forced to go public with its intentions because of a lack of progress in negotiations with the SanDisk board.

And in a stark warning to SanDisk shareholders, it states the company can no longer afford to go it alone. "Despite the significant [80%] premium we propose to SanDisk's current stock price, your letter states that our proposed price does not 'reflect the intrinsic value of SanDisk's business' and references the 52-week high," Samsung CEO Yoon-Woo Lee writes.

"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."

Samsung claims it still wants to reach an agreement with the SanDisk board and urges the company "to engage with us promptly in a productive discussion about our proposal".

The hostile approach may force the hands of both Toshiba and Seagate, who are also rumoured to be interested in buying SanDisk.