Sanjay Mehrotra’s SanDisk Bought Out by Western Digital for Nearly $19 Billion

Sanjay Mehrotra’s SanDisk Bought Out by Western Digital for Nearly $19 Billion

In a cash-and-stock deal, Irvine, Calif.-based Western Digital bought Milpitas, Calif.-based and Indian American-led SanDisk, a flash-memory chip maker. The deal is worth about $19 billion, with SanDisk’s stock valued at about $86.50 a share.

Western Digital is a maker of hard drives for businesses and personal computers, and is hoping to extend its reach in the storage industry with the deal. The two companies said they have complementary product lines, including hard disk drives, solid-state drives, cloud datacenter storage solutions and flash storage solutions. SanDisk president and CEO Sanjay Mehrotra is expected to join Western Digital’s board upon the transaction closing.

“The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry,” Western Digital CEO Steve Milligan said in a statement. When the deal, approved by both boards, finalizes and the companies combine, Milligan will remain CEO and the headquarters will stay in Irvine. The deal, still needing approval from SanDisk shareholders, is expected to close in the third quarter of 2016.

Western Digital had previously announced investment from Unisplendour in September. The deal with Unisplendour, a division of China’s Tsinghua Holdings, would make them a minority shareholder in Western Digital with a $3.78 billion investment.

If that deal closes prior to the SanDisk Corp. acquisition, Milligan’s company will pay $85.10 per share in cash and 0.0176 shares of its stock for each SanDisk Share. However, if the acquisition comes first, the price will be $67.50 in cash and 0.2387 shares for each share of SanDisk. The WD-SanDisk transaction is expected to add to adjusted earnings per share within a year of the deal closing. Up until that time, WD expects to continue paying its quarterly dividend and plans to suspend its stock buyback program.

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