Samsung Electronics today announced that it has withdrawn a proposal to acquire all of the outstanding shares of flash memory manufacturer SanDisk Corp. for $26 per share in cash. In a letter to SanDisk's board of directors, Samsung vice chairman and CEO Yoon Woo Lee said he was disappointed that an agreement was unable to be reached.
"I continue to believe that a combination of our two companies would have created a superior global brand, an unparalleled technology platform and the scale and resources to drive convergence in the marketplace," Woo Lee stated in the letter.
Samsung's disciplined approach required the company to face the "growing uncertainties SanDisk's business," which he said may continue to deteriorate in this difficult economic environment and further impact its standalone value.
Woo Lee cited SanDisk's third-quarter results, released on Oct. 20, specifically that the company had reported a $250 million operating loss, in addition to a "hurried" renegotiation with Toshiba and job losses across the organization, saying they all point to a "considerable increase in [SanDisk's] risk profile and a material deterioration in value, both on a standalone basis as well as to Samsung."
In response to the withdrawn offer, SanDisk issued a statement acknowledging that from the start of this process, it remained open to a transaction that recognized SanDisk's long-term value and contained the right protections for SanDisk's shareholders.
According to the statement, SanDisk "repeatedly outlined a clear path to hold further discussions, including most recently in a letter on Sept. 15, and Samsung consistently chose to ignore that path and, in fact, never contacted SanDisk regarding their proposal after we delivered our letter. We believe this raises questions about the real motivations behind Samsung's offer."