Milpitas-based SanDisk on Wednesday agreed to sell itself to Irvine-based Western Digital for nearly $19 billion in cash and stock in a deal that underscores a fresh consolidation of the semiconductor industry.
SanDisk is a primary supplier of chips known as flash memory, as well as thumb drivers and other devices and products that use the chips.
Western Digital is a major manufacturer of hard disk drivers, so gaining the flash memory technology immediately enables the company to transform itself in a more diversified company.
The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry, Steve Milligan, chief executive officer of Western Digital, said in a prepared release.
Flash memory is increasingly being used in mobile devices and data storage centers.
This combination creates an even stronger partner for our customers, Sanjay Mehrotra, chief executive officer of SanDisk, said in a prepared release.
The offer from Western Digital values SanDisk at $86.50 a share. That s 15 percent higher than the Tuesday closing price for SanDisk of $75.19.
SanDisk had benefited from the robust growth in demand for its flash memory chips in products such as smartphones.
But SanDisk hadn t been able to achieve similarly brisk sales to companies and enterprises.
Wednesday, SanDisk reported financial results that topped Wall Street s expectations. SanDisk earned 65 cents a share. Adjusted for one-time costs and expenses related to stock options, profits were $1.09 a share. Wall Street had expected a profit of 80 cents.
The proposed sale of SanDisk is expected to be completed during the third quarter of 2016. Shareholders of SanDisk must still approve the deal.
SanDisk shares rose Wednesday after the deal was announced.
SanDisk headquarters in Milpitas. BANG staff photo
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