Manufacturer of storage devices Western Digital is planning to acquire Sandisk Company, a producer of memory cards, for $19 Billion. Both companies have informed the stock market regarding the acquisition which will boost Western Digital’s hold on storage solutions worldwide. It has offered all kinds of storage devices like external spinning hard drives and internal ones. Speculations were then widespread that Sandisk was finding interested buyers because of investment issues, and Western Digital was in the process of diversifying its business with the addition of flash-based memory chips.
The acquisition value is based on a 15% premium at $86.50 per share which translates to $15.4 billion. SanDisk is experiencing financial issues lately which forced management to seek relief via the acquisition process. On the other hand, Western Digital is moving in a direction towards flash memory because of the burgeoning increase in smartphone and portable devices worldwide. The deal involves the transfer or exchange of stocks and some cash on the part of Western Digital with Sanjay Mehotra, CEO of Sandisk, joining the Western Digital board in the near future.
Western Digital has been in acquisition binge to expand and diversify its business in the face of challenging innovation hovering over the world of technology. The merging of the two companies is expected to create innovative storage solutions that fit the world demand for storage devices commensurate with the latest portable devices introduced by a myriad of companies. For 15 years, Sandisk had a long-term strategic partnership with Toshiba which saw a vertical integration of the business.
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