Western Digital Corp yesterday agreed to buy SanDisk Corp for about US$19 billion, gaining access to a supply of semiconductors that are at the heart of a fast-growing type of computer storage.
The drive maker is to pay US$86.50 per share for SanDisk, including US$85.10 per share in cash and 0.0176 of a Western Digital common share, according to a statement.
SanDisk closed at US$75.19 on Tuesday in New York trading, giving the company a market value of US$15.4 billion.
SanDisk is one of the largest makers of NAND flash memory chips, which store data in mobile devices and are increasingly being used in hard drives in computing. The technology uses less power and is faster to access information, making it more useful in cloud-computing data centers.
Western Digital is trying to branch out as its home market shrinks. The company, which had a leading 44 percent slice of the market for hard disk drives last year, suffered a sales decline of 4 percent in its most recent financial year as the overall business shrank to US$32.9 billion, according to data from International Data Corp (IDC).
The market for NAND flash chips, where SanDisk in combination with joint venture partner Toshiba Corp was the largest producer, rose to US$28.9 billion last year, IDC said.
Western Digital might use part of the proceeds from Tsinghua University’s agreement to invest US$3.8 billion in the company, announced last month, to buy SanDisk.
The move by the Chinese state-run government entity was a further demonstration of China’s determination to acquire US technology to help it replace component imports.
That drive has helped fuel a record year for semiconductor mergers and acquisitions as companies get together to acquire scale in a slowing market where costs continue to go up.
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