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Samsung withdraws offer to acquire SanDisk
- — 22 October, 2008 18:42
Samsung Electronics has withdrawn its offer to acquire rival flash memory-maker SanDisk citing a lack of progress after six months of discussions between the two companies.
The deal would have strengthened Samsung's position as the number one maker of flash memory chips but could have been difficult to pull-off in part because SanDisk is closely allied with number two-maker Toshiba. Some analysts also expected anti-trust problems should Samsung have reached a deal.
In a letter to SanDisk's board Lee Yoon Woo, CEO of Samsung Electronics, also cited two events from Monday as reasons to abandon the acquisition proposal.
First, SanDisk and Toshiba announced a renegotiation of their flash memory joint-venture partnerships in Japan that had seen them as equal investors in two memory chip production lines and the chips they made. Under the new deal Toshiba would end up with 65 percent of the plant and output while SanDisk took the remaining 35 percent. Then later in the day SanDisk announced a US$250 million operating loss for the July to September quarter.
"Your surprise announcements of a quarter billion dollar operating loss, a hurried renegotiation of your relationship with Toshiba and major job losses across your organization all point to a considerable increase in your risk profile and a material deterioration in value, both on a stand-alone basis as well as to Samsung. As a result of these developments, we are no longer interested in acquiring SanDisk at $26 per share," read the letter, a copy of which was released by Samsung.