Looks like its the season for market consolidation. Few days back, we spoke about Dell acquiring EMC; today, we have another big news of Western Digital (WD) acquiring SanDisk for $19 Billion. This combination is expected to be the next big step in the transformation of Western Digital into a storage solutions company with global scale, extensive product and technology assets, and deep expertise in non-volatile memory (NVM).
The deal values SanDisk at $86.50 a share, which is a 15% premium on the previous day’s closing price, giving the company a value of $15.4 billion. The transaction will be financed by a mix of cash, new debt financing and Western Digital stock. In connection with the transaction, Western Digital expects to enter into new debt facilities totaling $18.4 billion, including a $1.0 billion revolving credit facility. The proceeds from the new debt facilities are expected to be used to pay part of the purchase price, refinance existing debt of Western Digital and SanDisk and pay transaction related fees and expenses. If SanDisk’s cash balance falls below certain thresholds at the time of transaction close, the merger agreement provides for an adjustment to the mix of cash and stock consideration.
Toshiba has been a long-term strategic partner to SanDisk for 15 years. The joint venture with Toshiba will be ongoing, enabling vertical integration through a technology partnership driven by deep collaboration across design and process capabilities. The joint venture with Toshiba provides stable NAND supply at scale through a time-tested business model and extends across NVM technologies such as 3D NAND.
With this transaction, Western Digital is expected to double its addressable market and expand its participation in higher-growth segments. Steve Milligan will continue to serve as chief executive officer of the combined company, and the company will remain headquartered in Irvine, California. Upon closing, Sanjay Mehrotra is expected to join the Western Digital Board of Directors.
“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. The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry. I’m excited to welcome the SanDisk team as we look to create additional value for all of our stakeholders, including our customers, shareholders and employees.” – Steve Milligan, chief executive officer, Western Digital.
Like I said before, Citrix looks be the next big company to hit at. I think, either Microsoft or HP will buy it. Lets see if it ever happens!
— Vijay Raj (@rajvj) October 12, 2015