Hard Disk Drive Vendor Western Digital to Buy Flash Memory Company SanDisk for $19 Billion

Western Digital, the manufacturer of storage solutions well-known for delivering hard disk drives (HDDs) to the global market, has announced the acquisition of flash memory specialist SanDisk. The transaction, approved by the boards of directors of both companies, is valued at approximately $19 billion.

SanDisk brings a 27-year history of innovation and expertise in flash memory (non-volatile memory – NVM), systems solutions and manufacturing. The combination of SanDisk and Western Digital businesses enables Western Digital to vertically integrate into NAND Flash Memory solutions, securing long-term access to solid state drive (SSD) technology at lower cost. 

The acquisition will be financed by a mix of cash, new debt financing and Western Digital stock. The transaction is subject to approval by SanDisk shareholders and expected to close in the third calendar quarter of 2016.

HDDs, SSDs, Cloud

sandisk-ssd“This transformational acquisition aligns with our long-term strategy to be an innovative leader in the storage industry by providing compelling, high-quality products with leading technology,” said Steve Milligan, chief executive officer, Western Digital. “The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry. I’m excited to welcome the SanDisk team as we look to create additional value for all of our stakeholders, including our customers, shareholders and employees.”

Western Digital and SanDisk’s complementary product lines, including HDDs, SSDs, cloud datacenter storage solutions and flash storage solutions, would provide the foundation for a broader set of products and technologies from consumer to data center. Both companies would have strong R&D and engineering capabilities and a rich base of fundamental technologies with over 15,000 combined patents issued or pending worldwide.

“Western Digital is globally recognized as a leading provider of storage solutions and has a 45-year legacy of developing and manufacturing cutting-edge solutions, making the company the ideal strategic partner for SanDisk,” said Sanjay Mehrotra, president and chief executive officer, SanDisk. “Importantly, this combination also creates an even stronger partner for our customers. Joining forces with Western Digital will enable the combined company to offer the broadest portfolio of industry-leading, innovative storage solutions to customers across a wide range of markets and applications.”

western-digital-steve-milligan
“The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry,” said Steve Milligan, chief executive officer, Western Digital.

Toshiba has been a long-term strategic partner to SanDisk for 15 years. The joint venture with Toshiba will be ongoing, enabling vertical integration through a technology partnership driven by deep collaboration across design and process capabilities. The joint venture would provide stable NAND supply at scale through a time-tested business model and extends across NVM technologies such as 3D NAND.

Financial Advisors

Steve Milligan will continue to serve as chief executive officer (CEO) of the combined company, and the company will remain headquartered in Irvine, California. Upon closing, Sanjay Mehrotra is expected to join the Western Digital Board of Directors.

BofA Merrill Lynch and J.P. Morgan are acting as lead financial advisors to Western Digital and will provide committed financing for the transaction. Also, Credit Suisse is acting as a financial advisor and providing committed financing, and RBC Capital Markets is providing committed financing. Cleary Gottlieb Steen & Hamilton LLP and Baker & McKenzie are acting as legal advisors to Western Digital.

Goldman Sachs is acting as the exclusive financial advisor to SanDisk. Skadden, Arps, Slate, Meagher & Flom LLP is acting as the exclusive legal advisor to SanDisk.

Furlow consulting