Feeds

Samsung flees SanDisk bid

Hariri pushes the beast off

Build a business case: developing custom apps

Samsung has pulled out of its SanDisk bid because it looks far too risky - with SanDisk making increased losses, selling off some manufacturing capacity, and its share price tumbling well below the bid offer.

A Samsung bid withdrawal letter, quoted by Objectve Analysis's Jim Handy, said: “Your surprise announcements of a quarter billion dollar operating loss, a hurried renegotiation of your relationship with Toshiba and major job losses across your organization all point to a considerable increase in your risk profile." The letter also mentions the difficult economy.

The speed of the recessionary winds circling the globe has upset Samsung's calculations and it isn't going to finance SanDisk CEO Eli Hariri's fantastical notions of his company's valuation.

On his part Hariri isn't going to sell himself and SanDisk short to some opportunistic Korean carpetbagger. The SanDisk reply to the withdrawal letter said: "SanDisk's Board has remained open to a transaction that recognizes SanDisk's long-term value and contains the right protections for SanDisk's shareholders."

Both companies say the other would not talk meaningfully. The thing is SanDisk and Samsung have greatly differing views of SanDisk's value. The tenor of SanDisk's comments during the bid has suggested it thinks it is worth upwards of $35/share and that Samsung knows this and is trying to buy it at an unrealistically low $26/share.

SanDisk probably thinks that Samsung was never entirely serious with the bid, using it as ploy to gain leverage in license renewal negotiations. SanDisk's court victory in validating an earlier license termination probably killed the bid from that point of view. The withdrawal, Hariri will say, vindicates SanDisk's position.

Samsung thinks that the Hariri and his board are unrealistic and intransigent. According to its reading, SanDisk hasn't come to terms with the fact that their world has changed, with the NAND flash glut leading to a second consecutive quarterly operating loss ($155m). Samsung sees a panicked sale of 30 per cent of SanDisk's joint-venture manufacturing capacity to Toshiba and a falling SanDisk stock price, down to $14.76, well below the bid price. both indicating SanDisk instability. Obviously, SanDisk share buyers think the bid is going nowhere and that SanDisk's value is way down from Hariri's ideas.

Over-supply in the NAND flash business will continue and consolidation is still needed. However, SanDisk, and Toshiba and no doubt other flash manufacturers think that flash Nirvana is around the corner and they will make big bucks. Samsung is of the same mind but less bullish

Tomorrow is another day and SanDisk could yet be there for the taking if its business results keep heading south. ®

Build a business case: developing custom apps

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.