Samsung finally threw the towel on its endeavour to acquire SanDisk.
The Korean company cited 2 main reasons for its reversal of heart that resulted in a considerable increase in SanDisk’s risk profile:
- SanDisk lousy third-quarter earnings with “a quarter billion dollar operating loss” and “major job losses” across the board;
- And the hurried renegotiation of the Toshiba relationship.
Overall, I feel both companies are quite happy of the negotiations ending that way. First, SanDisk successfully resisted a fire sale amid mounting economic pressure in a down Flash-memory market. Second, Samsung can have it a go again at a much lower price!
“Samsung certainly noticed that even an obscure move by SanDisk caused SanDisk’s share price to fall. Although there are polar disagreements about SanDisk’s motive for restructuring its joint-venture with Toshiba, the stock market’s response drove SanDisk’s share price from around $16 to around $14 even though SanDisk will be improving their cash position with this agreement. Keep in mind that the initial offer by Samsung made SanDisk’s price jump from $13.50 to $21″, explains Jim Handy of Objective Analysis.
Now, is Seagate interested? We’ll make sure to ask them on Wednesday when the Scotts Valley, Calif., announces its earnings.
See also coverage on the Barron’s Tech Trader Daily.
Back to the drawing board.
