Western Digital, a US-based hard disk drive maker, announced this morning that it has entered into an annexure to acquire SanDisk, a manufacturer of flash memory storage devices, for about $19 Billion. The company will pay the amount of deal in the conjunction of cash and stock.
The deal values SanDisk at $86.50 per share or a total equity value of about $19 Billion, and San Disk is currently up 4.78% in pre-market trading. The agreement brings together two of the largest storage companies and will allow Western Digital to emulate in the storage industry by giving it access to SanDisk flash products.
As far as the analysts are concerned, Western Digital is a dominant player in the sequential storage industry but when it comes to SSD (Solid-State Drive) market, it needs access to better SanDisk’s NAND technology to compete better in SSD market. SSDs are most commonly used in laptops, smartphones, cloud computing and data centres.
In the past year, SanDisk went through inventory and production issues, leading to a significant plunge in its stock price. From that incident, the company was targeted as a prime acquisition by industry analysts but Western Digital is widely stating that SanDisk’s flash product and technology will help WD to improvise its consumer products, data centers, etc.
After the completion of the deal, SanDisk CEO Sanjay Mehrotra is requisite to join the Western Digital board. On the other hand, Steve Milligan, Western Digital CEO, will continue in that role.