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SanDisk Rejects Samsung
Says proposal is inadequate in multiple respects and not in the best interests of SanDisk's stockholders
September 17, 2008
2 Min Read
MILPITAS, Calif. -- SanDisk Corporation (NASDAQ: SNDK - News), the world’s largest supplier of flash storage card products, today announced that its Board of Directors confirmed that it received an unsolicited, non-binding proposal from Samsung Electronics Co., Ltd (KSE: 005930) to acquire SanDisk for $26 per share in cash. After multiple meetings with Samsung since its original indication of interest in an acquisition, SanDisk’s Board of Directors has deliberated on Samsung’s proposal with advice from its financial and legal advisors, and on September 15, 2008, sent the enclosed letter to Samsung reflecting the board’s unanimous conclusion that the proposal is inadequate in multiple respects and not in the best interests of SanDisk’s stockholders. Samsung responded by reiterating its offer to SanDisk on September 16, 2008.
As stated in its letter to Samsung, SanDisk’s Board of Directors concluded that, in its view, the proposal:
significantly undervalues SanDisk given the long-term prospects of its business;
does not reflect the value of the substantial synergies that Samsung can attain from an acquisition of SanDisk as shown by Samsung’s indication that it might be willing to pay a significant premium to the SanDisk $28.75 per share closing price on May 22, 2008 – the date Samsung first approached SanDisk with respect to an acquisition – and represents a 55% discount to SanDisk’s 52-week high;
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;
will be subject to regulatory review, an outcome that is uncertain;
raises the possibility that the offer is a calculated negotiating ploy or an attempt to gain leverage in the ongoing licensing negotiations between the companies, particularly in light of the fact that the parties have met over 10 times on this issue since June 2007; and
despite repeated requests by SanDisk for basic stockholder protections, does not provide adequate certainty or protection to SanDisk’s stockholders if an agreed upon transaction does not close.
Eli Harari, Chairman of the Board of SanDisk and Chief Executive Officer commented, “We believe Samsung’s proposal does not provide appropriate value to our stockholders and is opportunistically timed at the trough of an industry-wide downturn. In our view, this proposal fails to recognize the value of our patent portfolio, in particular to Samsung, our significant investments in our strategic partnerships, and our technology leadership in 3 and 4 bits per cell flash memory, advanced controllers and three dimensional (3D) semiconductor memory. We believe we have the strategy, execution record, innovation and financial resources to return to profitable growth and be the flash memory leader in new growth markets in mobile devices, solid state disk, and portable consumer electronics.”
SanDisk Corp.
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