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Samsung: $5.8b offer for SanDisk, may be refused

updated 07:20 pm EDT, Tue September 16, 2008

Samsung buyout offer

After four months of fruitless negotiation, Samsung is offering to buy flash memory manufacturer SanDisk for $5.8 billion, a move which has the latter accusing the former of undervaluing its worth. The Wall Street Journal reports that the South Korean electronics giant made the $26-per-share offer to gain the company's customer portfolio, as well as patents on which it normally pays hundreds of millions of dollars in royalties per year. This represents Samsung's first move to acquire a major business in 13 years.

Decreased profit margins on memory are also a large driving factor in Samsung's interest, due to an excess of production in the recent past.

The offer is expected to fail, however, with a SanDisk representative saying Samsung is taking advantage of its depressed share price, an "opportunistic attempt" to clear a competitor from the field. Sandisk plans to reject the offer, ultimately. SanDisk's shares dropped 76-percent over the course of the last year.

Samsung has enjoyed the past several years being debt free, and has offered a completely cash deal. Historically, Samsung has generated profit every quarter, finishing the recent second quarter with $5.8 billion in cash and assets.

The acquisition would also gives Samsung a more prominent footprint with NAND flash sales. Although Samsung is already the biggest source of NAND flash memory, it would also benefit from the SanDisk's joint membership with Toshiba, the latter producing the components required by SanDisk.

by MacNN Staff



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