SanDisk Rejects Samsung Hostile Takeover Bid

Crows: You'll have to do better than that...

When you are the size of Samsung you clearly don’t easily take no for an answer…

The Korean mega-corporate has today launched a hostile takeover bid for flash guru SanDisk sending a open letter to its board of directors and stating it ”will” buy the company for $26 per share paid in cash.

Stating its reasons Samsung explained “SanDisk Corporation (‘SanDisk’) continues to cling to unrealistic expectations on both its standalone market value and an appropriate merger price. Under our proposal, which we are reiterating here, we remain prepared to acquire all of the outstanding shares of SanDisk for $26 per share in cash… This offer is full and fair and we believe that, given an opportunity, your shareholders would agree.”

This seems unlikely to happen however as SanDisk didn’t take kindly to the threat and has immediately and unanimously rejected the offer stating the proposal “significantly undervalues SanDisk given the long-term prospects of its business” and “does not reflect the value of the substantial synergies that Samsung can attain from an acquisition of SanDisk as shown by Samsung’s indication that it might be willing to pay a significant premium to the SanDisk $28.75 per share closing price on May 22, 2008”.

Ultimately, both positions make obvious sense as SanDisk’s expertise with flash memory and valuable patents (it holds the outright or shared patents on every memory card format on the market) give it phenomenal potential over the coming years. The company has also leveraged these skills to develop its successful line of Sansa players.

Looks like you’ll have to do better Samsung, and in the meantime watch out for Seagate

Samsung Open Letter via MarketWatch
SanDisk Response via BusinessWire

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