SAN FRANCISOSouth Korea's Samsung Electronics Co. Ltd. has gone public with a proposal to acquire flash memory maker SanDisk Corp. for $26 per share.
A letter signed by Yoon-Woo Lee, Samsung CEO, addressed to SanDisk's board of directors states that Samsung was "deeply disappointed" by SanDisk's rejection of the offer on Sept. 15.
The Samsung letter, made public Tuesday (Sept. 16), reiterates the offer of $26 per share in cash and argues for the "compelling business logic" of a Samsung-SanDisk union. An offer of $26 per share, based on SanDisk's outstanding share total of nearly 225 million, would be worth more than $5.8 billion.
SanDisk issued a statement, including excerpts from its Sept. 15 letter to Samsung, confirming the unsolicited Samsung bid and stating that its board of directors unanimously rejected the proposal. Samsung's bid significantly undervalues SanDisk, given the long-term prospects of its business and does not reflect the value of the substantial synergies that Samsung can attain from an acquisition of SanDisk, SanDisk said.
"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," said Eli Harari, SanDisk's chairman and CEO. The bid fails to recognize the value of SanDisk's patent portfolio, investments in strategic partnerships and technology leadership, he added.
According to the Lee's letter, Samsung's offer followed four months of discussions and meetings in Seoul and San Francisco. The letter states that SanDisk "continues to cling to unrealistic expectations on both its standalone market value and an appropriate merger price."
Reports of a possible Samsung acquisition of SanDisk first surfaced Sept. 5. On Tuesday, Reuters reported that Japan's Toshiba Corp. is also interested in making a bid for SanDisk if it appears that Samsung may acquire the company.
Samsung and Toshiba are ranked No. 1 and No. 2 in NAND flash, respectively, and the acquisition of SanDisk could give Samsung a near monopoly in NAND devices, components and subsystems. SanDisk and Toshiba, though competitors, have also maintained a NAND chip joint venture for several years.