Western Digital CEO Steve Milligan today called the agreement a « transformational combination » that creates « a leader in media agnostics in the storage technology industry. » Until now, Western Digital`s business has focused on regular hard drives, but they are starting to become obsolete as faster and more reliable Solid State drives (such as SanDisk`s) become cheaper. The purchase of SanDisk is not really « transformative » for Western Digital (it`s still a digital storage company), but it`s necessary if the company wants to remain relevant. The agreement recognizes the strength and value of each company`s intellectual property and allows Western Digital to continue to focus on developing and finding applications for next-generation flash technologies. At the time of its acquisition by Western Digital, SanDisk was a leading innovator in Flash technology for nearly thirty years and invested billions of dollars in research and development worldwide to design, manufacture and market flash products. This agreement allows Western Digital to continue to realize the value of the SanDisk acquisition and extend the company`s mutually beneficial relationship with Samsung. The financial terms of the renewed agreement were not disclosed. However, on February 23, Western Digital and SanDisk made some changes to the price of the agreement. Under the new agreement, Western Digital paid $US 78.50 in cash and $0.24 $US for each SanDisk share, for a total of $15.78 billion. The transaction is expected to be completed in the second quarter of the year. The acquisition of SanDisk will open new avenues of growth for Western Digital and help measure the market power of the Solid State Drive (SSD) segment. The merger will result in economies of scale, cost reductions, greater market reach and improved product width, among other things.
The company will also be able to offer competitive solutions in cloud-based computing, which has captured the place of digital storage solutions in the storm in recent years. Western Digital Corporation (NASDAQ: WDC) is a leading provider of storage technologies and solutions that enable people to create, use, live and store data. The company responds to the ever-changing market requirements by offering a comprehensive portfolio of compelling, high-quality storage solutions, with customer-oriented innovation, high efficiency, flexibility and speed. Our products are marketed under the HGST, SanDisk and WD brands to OEMs, distributors, resellers, cloud infrastructure providers and consumers. For more information, see www.hgst.com, www.wd.com and www.sandisk.com. SanDisk CorporationInvestor Contacts: Jay Iyer, email@example.comBrendan Lahiff, firstname.lastname@example.orgMedia Contact:Carol Kurimsky, email@example.com The transaction is financed by a mix of cash, newly indebted financing and digital western shares. As part of the transaction, Western Digital expects new debt facilities to total $18.4 billion, including a $1.0 billion revolving credit facility. Proceeds from the new debt facilities will be used to pay a portion of the purchase price, refinance the existing debts of Western Digital and SanDisk, and pay transaction-related fees and expenses. If, at the time of the transaction, the balance of the SanDisk bar falls below certain thresholds, the merger agreement provides for an adjustment of the combination of cash and equity holdings. Western Digital Corporation and SanDisk Corporation announced today that they have reached a final agreement under which Western Digital will purchase all of SanDisk`s outstanding shares for a combination of cash and shares. The offer valued SanDisk`s common shares at $86.50 per share, for a total capital value of approximately $19 billion, using a five-day volume weighted average price of $79.60 per share of Western Digital`s common stock.