Western Digital Corp, agreed to buy
SanDisk Corp. for about $19 Billion in cash and stock, a deal that positions
the disk drive maker for growth in the struggling storage industry. 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.
Western Digital is facing
challenges to its core hard disk drive business, which has been under pressure
from the success of sales of Apple Inc. iPad and other tablet computers that
store data on flash memory chips rather than on magnetic disks. Those devices
have long weighed on the sales growth of consumer laptop computers, which are
major users of disk drives. Acquiring SanDisk could be a hedge and a driver of
new growth.
The acquisition comes about three
weeks after an arm of China Tsinghua Unigroup Ltd. agreed to pay $3.78 Billion
for a 15% stake in Western Digital, the latest US tech company to scramble for
politically connected Chinese partners amid the difficult business environment.
SanDisk had benefited from the explosive growth in demand for products such as
smartphones.
But its results have lagged behind
recently amid a variety of problems, from product qualification delays to lower
than expected sales of enterprise products. The deal is expected to add to
earnings within 12 months of closing and it will achieve synergies of $500
Million within 18 months.
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