SANDISK REJECTS SAMSUNG ACQUISITION BID
MILPITAS – 09/24/08 – US flash memory maker SanDisk Corp. has reportedly rejected a $5.9 billion bid by top memory chip-maker, Samsung Electronics Co., but said it would not rule out a deal at a better price.
According to industry sources, acquiring SanDisk would help South Korea-headquartered Samsung cut the $350 million it pays each year to use SanDisk's patented flash technology, and widen the company’s lead in the flash memory market as the industry battles steep memory chip price falls due to a supply glut.
SanDisk said in a statement that Samsung's $26-a-share cash offer undervalued the company, but it remained open to a deal with Samsung at a price that recognizes its "intrinsic value."
Samsung had not yet made any decision on whether to raise its bid, said a Samsung spokesman in Seoul.
A deal around that level would be the biggest takeover by Samsung, which has grown its business without having to resort to big merger and acquisition deals.
NAND flash memory is a form of convenient and compact data storage that is used in a number of consumer gadgets, including digital cameras, cell phones and portable music players. The company uses Samsung's chips in its flash memory products.
The Toshiba Corp., which jointly operates a memory chip production plant with SanDisk in Japan, said it was open to a combination with SanDisk, but there were no concrete talks yet.
Toshiba, the world's second largest NAND flash maker, and third-ranked Hynix Semiconductor Inc both declined to comment yesterday on Samsung's offer.
Samsung currently holds a 42.3% share of the global NAND market, followed by Toshiba and Hynix, with 27.5% and 13.4%, respectively.
Some analysts have said that the California-based company can’t afford to snub a deal at a time of severe oversupply and when worsening consumer confidence threatens sales of the products that use the chips.
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