SanDisk Junks Samsung Offer

SanDisk rejected Samsung’s offer of $5.85 billion takeover package saying the proposed deal has inadequacies in many respects.

Meanwhile, SanDisk’s shares went up by 52 percent or $7.81 per share pegging at $22.85 during after-hours trading.  The stocks closed at $15.04 during regular day session improving by 63 cents.

Samsung Standing Pat on Its Offer

On the other hand, Samsung stands pat on its offer saying the $26 cash per share proposal for the Milpitas based SanDisk.  Yoon-Woo Lee, Samsung’s chief executive officer, wrote to the SanDisk board of directors that the company has unrealistic expectations of its independent market value and the proper price for final merger.  The letter was dated September 15 and was sent after four months of rigorous negotiations.

SanDisk for its part replied that Samsung highly devalues their market price.  SanDisk said they have secured large market exposure for its flash drives and memory cards for digital cameras and cellular phones.

SanDisk executives said it was Samsung who indicated that it is willing to purchase SanDisk based on the closing price of shares on May 22, 2008.  On that time, SanDisk shares of stocks stands at $28.75.  It was the date that Samsung approached the flash drive giant regarding a possible buyout deal.  

The statement of SanDisk also emphasized that Samsung’s offer is trying to take advantage of the favorable showing of SanDisk’s shares of stocks.  The statement alleged that the offer of Samsung was opportunistic.

Fair and Full Offer for SanDisk

In a different note, Samsung, South Korea’s premier electronics company said their offer of $26 per share represents the premium prices of SanDisk based on the September 4 levels.  At that time, SanDisk share prices stand at $13.46.   Samsung also said this is SanDisk’s share price levels before news of a possible take over was leaked to the media.

On Wednesday, Samsung said the company is still seriously discussing the matter with SanDisk and there are no finalizations yet regarding offers and counter offers.  James Chung, spokesman for Samsung said his company’s offer is very fair and full and that the $26 per share proposal still stands.

Samsung is the maker of NAND flash memory for digital gadgets like music players and digital cameras.  Samsung also makes DRAM chips used on personal computers and laptops.

Lee, in a separate letter said Samsung and its offer is could greatly help SanDisk from the deteriorating conditions of the flash memory market.  The market, said Lee, is now facing an oversupply which puts pressures on prices.  This and the weakening consumer spending will be detrimental to SanDisk.

On Wednesday, the shares of stock of Samsung Electronics Inc. went up by 1.7 percent during intra-day trading to close at 534,000 Won or approximately $463.