The Cloud

Western Digital Buys SanDisk for $19 Billion

The deal positions the No. 1 disk drive maker to move into the flash-memory market amid weak growth in its core business.
Katie Kuehner-HebertOctober 21, 2015

Western Digital said Wednesday it had agreed to acquire flash-memory supplier SanDisk for about $19 billion in a move that gives the No. 1 disk drive maker access to another data storage technology.

The deal values SanDisk common stock at $86.50 a share, a 15% premium over Tuesday’s closing price. After the acquisition was announced, the stock climbed about 2%, to $76.72.

“This transformational acquisition aligns with our long-term strategy to be an innovative leader in the storage industry by providing compelling, high-quality products with leading technology,” Steve Milligan, chief executive officer of Western Digital, said in a press release.

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Western Digital has been grappling with slow growth in disk drives for laptop and desktop computers as more mobile devices and some data center equipment have converted to flash memory, which is faster, uses less energy and is less prone to failures than spinning disks, according to The Wall Street Journal.

SanDisk, meanwhile, is a leader in solid state drive, or SSD, technology, which is built around flash memory chips that are incorporated into mobile devices and, increasingly, ultra-thin laptops and data centers for cloud computing.

SanDisk’s results have lagged recently amid a variety of problems, from product-qualification delays to lower-than-expected sales of enterprise products, the WSJ said. It was rumored to looking for a buyer amid a wave of consolidation in the semiconductor industry driven by slowing growth and rising costs.

Microsemi earlier this week offered to acquire PMC-Sierra for $2.4 billion. Other recent deals include Avago Technologies$37 billion acquisition of Broadcom and Intel‘s purchase of Altera for about $16.7 billion.

Western Digital said its acquisition of SanDisk is expected to add to earnings within 12 months of closing and would achieve annual synergies of $500 million within 18 months.

“We recognized the fact that there was an element of the market that we were not able to participate in,” Milligan told the WSJ. “For quite a while we’ve been thinking about that.”

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