by Anton Shilov
10/21/2008 | 11:53 PM
Samsung Electronics late on Tuesday issued a statement claiming that the company no longer wanted to acquire SanDisk, a leading supplier of flash-based products in the world. The company said that in the existing market conditions it was no longer interested on taking over SanDisk at $26 a share.
“After nearly six months of efforts to pursue a transaction with no meaningful progress, we are withdrawing our proposal to acquire SanDisk. I am disappointed that we have been unable to reach an agreement on our proposal. 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, said Yoon Woo Lee, vice chairman and chief executive officer at Samsung.
Samsung noted that SanDisk recently posted roughly $250 million loss and also had to sell part of its manufacturing facilities to Toshiba, which significantly increases risk to the Milpitas, California-bases flash cards and drives supplier.
“We have obligations to our own shareholders which require that we take a disciplined approach. […]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 and a material deterioration in value, both on a stand-alone basis as well as to Samsung. As a result of these developments, we are no longer interested in acquiring SanDisk at $26/share,” said Yoon Woo Lee.
In response, SanDisk again indicated that its assets and future potential were undervalued by Samsung Electronics and even though the company remained open for a transaction, it believed that its cost is much higher than $5.85 billion proposed by the South Korea-based electronics conglomerate.
“From the start of this process SanDisk’s board of directors has remained open to a transaction that recognizes SanDisk’s long-term value and contains the right protections for SanDisk's shareholders. We repeatedly outlined a clear path to hold further discussions, including most recently in our letter on September 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,” said SanDisk in a statement.