Western Digital Corp. has agreed to buy SanDisk Corp. for about US$19 billion in cash and stock in a deal that moves the disk drive maker into a faster-growing business segment.
SanDisk is a major supplier of chips known as NAND flash memory, made jointly with Toshiba Corp., as well as thumb drives and other products that use the chips.
Western Digital, the No. 1 maker of disk drives, has been facing slowing growth as more mobile devices and some data center equipment have converted to flash memory, according to the Wall Street Journal.
The technology is faster, uses less energy and is less prone to failures than spinning disks.
“We recognized the fact that there was an element of the market that we were not able to participate in,” said Steve Milligan, Western Digital’s chief executive officer, in an interview. “For quite a while we’ve been thinking about that.”
SanDisk was thought to be shopping for a buyer as the semiconductor industry rapidly consolidates, and industry watchers had said Western Digital or Micron Technology Inc. would be logical bidders.
The offer values SanDisk at US$86.50 a share, a 15 percent premium to Tuesday’s close.
The acquisition comes about three weeks after an arm of China’s Tsinghua Unigroup Ltd. agreed to pay US$3.78 billion for a 15 percent stake in Western Digital, the latest US tech company to scramble for politically connected Chinese partners amid the difficult business environment.
Milligan will serve as chief executive of the combined company, which will be located at Western Digital’s base in Irvine, Calif. Upon closing, SanDisk CEO Sanjay Mehrotra is expected to join the Western Digital board.
Western Digital said the deal is expected to add to earnings within 12 months of closing, and it will achieve annual synergies of $500 million within 18 months.
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