RSSSamsung makes a hostile bid for SanDisk
By Tim Conneally | Published September 16, 2008, 6:47 PM
Following recent discussions between the two companies that caused speculation regarding a merger, Samsung has made a public cash bid for SanDisk shares.
On September 4, shares in storage company SanDisk quadrupled in value after a Samsung spokesman noted that there were yet unresolved talks between the two companies. Spokesman James Chung said, "We are considering various opportunities regarding SanDisk, but nothing has been decided."
SanDisk later confirmed that it had been in discussion with Samsung, but refused to comment upon any rumors: "SanDisk periodically has conversations with multiple parties, including Samsung, regarding a variety of potential business opportunities. We evaluate all of these opportunities, but maintain a policy of not commenting on market rumors or speculation."
Now, amid desperate market conditions, Samsung has offered $5.8 billion, or $26 per share to SanDisk's stockholders. This offer places a value on the stock six times higher than it was just one day before Chung's announcement.
SanDisk's board has responded to this approach with a unanimous rejection, calling it a gross undervaluation of the company's 52-week high stock price and an "opportunistic attempt to take advantage of SanDisk's current stock price, which is significantly depressed given industry cyclicality, the uncertainty resulting from the unresolved patent cross license agreement renewal with Samsung, and general equity market conditions."
Several factors contribute to the benefit Samsung could potentially receive from a SanDisk acquisition. Chief among these are the steep royalty fees it would no longer have to pay to SanDisk for licenses for multi-level cell (MLC) licensing, and the intellectual property SanDisk holds in the nascent 3D memory category.
If Samsung were to acquire SanDisk, it would not only be able to forego the MLC royalties, but obtain crucial footing in a next-generation integrated circuit memory technology.
10:50 am EDT September 17, 2008 - Interest in SanDisk is also strong just across the Korea Strait. Executives from Toshiba yesterday said the company is interested in making a counter-bid to block Samsung's takeover.
While Toshiba's bid could also be considered an opportunistic maneuver, the Japanese company faces a great deal of uncertainty in a Samsung and SanDisk merger. It looks to be more of a defensive strategy, as Toshiba has a long-standing partnership with SanDisk called the Flash Alliance. The two companies opened a 300mm wafer fabrication facility in Japan's Mie Prefecture called "Fab 4." Analysts speculate that a Samsung takeover could put this facility in jeopardy.
Samsung knows that $5.8B is undervaluing SanDisk. With the growth of flash-based devices, SanDisk's market value is closer to its 52-week high rather than a small multiple of its 52-week low.
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|A fascinatingly emotional appraisal not supported by reality.
Considering their 52 week high was $55.98 and their low $13.06 with a predominately negative slope - and their current value is $21.61, the above claim is without merit or substance.
You wouldn't by any chance be one of the Sandisk principals who have a somewhat wacked view of their company's value?
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|Wow, here comes foxfyre with his usual trolling. The bid *IS* undervaluing SanDisk, whether you believe it or not. Samsung obviously waited until share prices were as low as possible to make their bid appear very generous.
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|Such pathos, such angst, such emotion, such idiocy.
"Samsung obviously waited until share prices were as low as possible to make their bid appear very generous."
Do you just make this stuff up, or are you genuinely incapable of reading? They could have offered the actual market valuation of $13 a share!!! But gee, why cite facts as they simply invalidate your bogus assumptions!
Instead Samsung offered double the actual minimum market valuation and one half the year high market valuation - from which their tumble has been near constant with a percentage year to date change of NEGATIVE 50+ %!!!
Your emotion aside, its a shame the larger real world market as well as the facts in evidence disagrees. Potential earnings and value are an abstraction, as apparently they are quite incapable of realizing them. But of course we are sure that this is only a feint to throw off would be investors and customers. LOL!
Aside from your patently bogus emotional claims, one might be tempted to ask: "Got any facts, genius?"
But nope,...its just another of his infamous conspiracy theories spawned of his incredibly wacked imagination...
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|I will not point out the many times which you missuse "big" words to try and seem smarter than you truly are. The point of a large vocabulary is to use the best possible word to convey your point to the target audience, not to try and sound smarter than them. It especially does not work when you use the words incorrectly.
Moving on to the point. Of course Samsung is obviously placing a bid that undervalues Sandisk. It would be foolish to pay more than the company is worth, or even exactly what it is worth. Samsung is not in the position it is in today by losing money.
With a basic economics lesson you would know that it is merely a factof buying low and selling high. Good business sense dictates to buy as low as possible to make a profit, not the other way around.
To top off the fact that it is an undervalued bid, look no further than Sandisk's board rejecting the offer based on that fact. Who knows more about the company's worth than them? Surely not you or I.
Latz, SB
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|Big words?!
LOL!!! Oh, did I use "Samsung"? No wonder you are confused!
Lets' see, so exactly who is undervaluing SanDisk? Might it have been the stockholders who sold to the point that they were worth only $13 and change on the stock market??? Did evil Samsung do this? And prey tell us, exactly how do you establish YOUR personal objective valuation of SanDisk? Hmmm?
The FACT is that Samsung offered MORE than than current valuation, and they are somehow bad for doing this. Funny, their offer is GREATER (there's a BIG word for you!) than the current market price. So I guess anyone who is foolish enough to buy SanDisk's stock now is "undervaluing" them as well - or is it that they are simply 'valuing" them in accordance with the real world?
Again, such pathos, angst and lunacy. But I love your emotional valuation of a company not supported by reality or any other factor than your vivid imagination.
Its nice to seek sources for laughter here, and you certainly don't disappoint!
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|Obvious troll is obvious.
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