Green light for Western Digital-SanDisk merger

The merger of two major storage companies – Western Digital and SanDisk – was approved by shareholders Tuesday.

WD said in an securities filing that the deal values SanDisk at approximately $17 billion based on WD’s closing share price on March 2.

Now, the merger awaits approval by Chinese regulatory authorities. It will combine WD, a company that is focused on traditional disk drive storage, with Sandisk, which pioneered the technology of flash memory.

Western Digital – whose shareholders voted to issue new stock to finance the acquisition – expects the transaction to close in the second quarter of this year, the Irvine-based company said in a news release.

SanDisk, a flash memory company based in Milpitas, said in its own release that 98 percent of its shareholders approved the deal.

“The combination of SanDisk with Western Digital will enable the combined company to offer the broadest portfolio of industry-leading, innovative storage solutions to customers across a wide range of markets and applications,” said Sanjay Mehrotra, president and chief executive officer of SanDisk.

The acquisition by Western Digital has had its ups and downs.

Last year, China’s Unisplendour agreed to buy 15 percent of WD stock for $3.78 billion if Unisplendour’s investment received U.S. regulatory approval.

But Unisplendor ran into headwinds in Washington, where the secretive Committee on Foreign Investment in the U.S., or CFIUS, said it would investigate the proposed deal. That meant more time to close the deal and probably more transparency as to who the buyers are. Whatever the reason, Unisplendor dropped its bid for WD.

Under the terms of the merger agreement with SanDisk announced in October, when Unisplendor dropped out, Western Digital pays $67.50 per share in cash and 0.2387 shares of Western Digital common stock per share of SanDisk common stock.

Western Digital shares fell more tan 3 percent in midday trading to $46.55.

Photo: SanDisk corporate headquarters, Milpitas (Nhat V. Meyer/Bay Area News Group)

 

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