Samsung offers to buy SanDisk

September 17, 2008

, SAN FRANCISCO, September 17 – South Korea-based Samsung Electronics said it is offering to buy US flash-memory titan SanDisk for 5.8 billion dollars.

Samsung sent SanDisk\’s board of directors a letter saying it is sticking to its bid of 26 dollars per share and is "deeply disappointed" that the Northern California firm "clings to unrealistic expectations" regarding its market value.

Samsung and SanDisk executives have reportedly been discussing a possible tie-up for the past four months during meetings in Seoul and San Francisco.

"This offer is full and fair and we believe that, given an opportunity, your shareholders would agree," Samsung chief executive Yoon-Woo Lee wrote in the letter.

"While it has been and remains our strong preference to continue to work with you to reach a binding merger agreement in a cooperative and expeditious fashion, we have become increasingly concerned that the lack of progress is not serving the interests of either company\’s shareholders."

Samsung says its bid offers "a very substantial premium" of 93 percent above the closing price of SanDisk stock on September 4, the day prior to news breaking that the companies are in takeover talks.

The offer represents an 80-percent premium on the price of SanDisk stock at the close of trading on Monday.

Samsung cites a letter from SanDisk in which the firm\’s board maintains that despite the premium the bid does not "reflect the intrinsic value of SanDisk\’s business."

Samsung\’s chief executive argued that combining resources with SanDisk would be a shrewd business move for both companies given the rough and increasingly competitive business environment.

"Consumer spending and the overall economic situation have been getting worse," Lee wrote.

"As we have seen in recent months, markets have become more turbulent and global economic trends are negative…Faced with these challenges, now is the time to merge."

Troubles in the global economy put SanDisk in the position of being a seller in a buyer\’s market, according to analyst Rob Enderle of Enderle Group.

"It certainly would make a lot of sense to merge with Samsung," Enderle said of SanDisk. "The longer SanDisk waits the lower their valuation is likely to sink. And if Samsung walks away their valuation drops dramatically."

Samsung promises it would let SanDisk operate independently if it were to take over the California firm.

"It continues to be our strong preference to work together with the SanDisk board to reach a mutually agreeable transaction."

SanDisk did not return AFP calls for comment but has reportedly rejected the Samsung bid as "inadequate."

SanDisk bills itself as the world\’s largest supplier of flash memory cards used in devices from home computers and USB drives to mobile telephones and digital cameras.

Samsung is South Korea\’s largest company and is reported to be the second largest conglomerate in the world. Its extensive electronics holdings include television, mobile telephones and other product lines that use flash memory.

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