SanDisk in play - Samsung offers to buy SanDisk for $5.85 billion

[AccruedExpenditure]

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SAN FRANCISCO (Marketwatch) -- Samsung Electronics said late Tuesday that it has offered to acquire SanDisk Corp. for about $5.85 billion, capping several days of speculation about a potential combination of the two companies.
In a letter to SanDisk, Samsung said it was reiterating a previous offer to buy the company for $26 per share in cash, in a deal that would not be contingent to financing arrangements.

SNDK 15.04, +0.63, +4.4%) is resisting a deal. The letter said Samsung was "deeply disappointed" that SanDisk "continues to cling to unrealistic expectations on both its standalone market value and an appropriate merger price." The letter said the two companies have been in talks for the past four months.

Shares of SanDisk surged more than 50% in after-hours trading on Tuesday. The stock closed the regular session up 4.4% at $15.04.

The offer represents a premium of 93% over the price of SanDisk's shares before rumors of a potential merger began to drive up the stock earlier this month.

I entered a long call position SNDK after their Q2 earnings, SNDK rejected the offer as inadequate but this should still boost the price up nicely. Can't wait till the market opens tomorrow.

Cliffs:
AccruedExpenditure Invests in SNDK in July and holds
Samsung Offers 80 percent premium over today's close
...
Profit?

 

[Gothgar]

Originally posted by: AccruedExpenditure

Profit?

I would say yes.... maybe 70k ?

 

[Lonyo]

Honestly I would have to agree with Sandisk, Samsung are clearly trying to get them for a steal, and they're right to go with rejecting the offer.
$55 52-week high, the move towards SSD's instead of mechanical HDD's (the whole reason Samsung want to buy them).
$6bn would be selling themselves for pretty much nothing compared to what they have been worth and could be worth, and there is easily the potential for much better times ahead fo Sandisk without needing to be part of Samsung.

 

[AccruedExpenditure]

Originally posted by: Lonyo
Honestly I would have to agree with Sandisk, Samsung are clearly trying to get them for a steal, and they're right to go with rejecting the offer.
$55 52-week high, the move towards SSD's instead of mechanical HDD's (the whole reason Samsung want to buy them).
$6bn would be selling themselves for pretty much nothing compared to what they have been worth and could be worth, and there is easily the potential for much better times ahead fo Sandisk without needing to be part of Samsung.

SNDK is facing increasing margin pressure from no name SD manufacturers (they've lowered guidance earlier in the year) which explains some of the stock drop, but I agree w/ you Samsung is getting a hell of a deal @ 6bn... I'm hearing Toshiba might come over the top w/ an offer though
-AE

 

[LordSnailz]

Actually I'm not sure if Samsung is buying them for SSD's, from my understanding Samsung and Intel are the top guys in the SSD front.
I think it's a fair offer, the NAND market is brutal, with asp falling every quarter.

 

[PandaBear]

It is not a good deal for SNDK, the board members unanimously reject the offer within an hour or so.

Consider that very recently the price was above $26, Samsung want to take advantage of that. The royalty it pays SNDK is 300-400 Million a year and SNDK's R&D and shared fab with Toshiba means it could seriously disrupt Toshiba's plan in the future.

If I were Toshiba I would at least counter offer, but most SNDK shareholders think the company is worth at least $40 a share if not because of the financial crisis in wall street right now. The company has about $11 worth of cash per share, that means Samsung really are offering only $15 on top of the cash reserve for the company, very low indeed.

It wouldn't go through for sure.