As reported last month, South Korea's Samsung went public with a proposal to acquire flash memory maker SanDisk for $26 per share. 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 (Milpitas, Calif.) rejected that bid. But now, Samsung has backed away from the deal amid losses at SanDisk. SanDisk also renewed a deal with NAND partner Toshiba Corp., leaving Samsung little or no room to make a deal.

On Monday, SanDisk entered into a non-binding memorandum of understanding with Toshiba to sell approximately 30 percent of the current NAND fab capacity of the parties' joint ventures to Toshiba.

Seeking to raise cash amid losses and a memory downturn, SanDisk expects to receive cash and reduce equipment lease obligations by approximately $1 billion through this transaction. As part of the deal, Japan's Toshiba (Toshiba) plans to boost its NAND flash production.

Meanwhile, SanDisk said third-quarter revenue was $821 million, a decrease of 21 percent on a year-over-year basis. Net loss was $155 million, or minus $0.69 per diluted share, compared to GAAP net income of $85 million, or $0.36 per diluted share, in the third quarter of 2007.

''From the start of this process SanDisk's board has remained open to a transaction that recognizes SanDisk's long-term value and contains the right protections for SanDisk's shareholders,'' according to a statement from SanDisk.

''We repeatedly outlined a clear path to hold further discussions, including most recently in our letter on September 15, and Samsung consistently chose to ignore that path and, in fact, never contacted SanDisk regarding their proposal after we delivered our letter. We believe this raises questions about the real motivations behind Samsung's offer,'' according to SanDisk.