SanDisk rejects Samsung's $5.85-billion bid

Dr. Eli HarariSanDisk's board has unanimously rejected Samsung's unsolicited takeover proposal. The world's second-largest chipmaker had offerred to acquire  the world's largest supplier of flash storage card products for $5.85 billion at $26 per share,  a 66-per cent premium to the company's 30-day weighted average.

While rejcting Samsung's advnces, SanDisk said that the offer does not "reflect the intrinsic value of SanDisk's business" and referred to the 52-week high price of about $55 per share and said theoffer price was "opportunistic".

According to SanDisk, Samsung had initially indicated it would be willing to pay a "significant'' premium to the $28.75 per share closing price on 22 May 2008,   when Samsung first approached SanDisk.

Samsung made a non-binding proposal dated 9 August 2008, to acquire SanDisk Corporation for $26 per share in cash, which SanDisk says is a 55 per cent discount to the 52-week high, as SanDisk's share price is currently close to its lowest in five years in view of the cyclical nature of the industry, the uncertainity over its unresolved patent cross license agreement renewal with Samsung and the "general equity market conditions".

''We believe Samsung's proposal does not provide appropriate value to our stockholders and is opportunistically timed at the trough of an industry-wide downturn," said Eli Harari, chairman of the board of SanDisk and chief executive officer said in a letter to Dr. Yoon Woo Lee, Samsung's vice chairman and CEO.

He said the offer did not reflect the value of the substantial synergies that Samsung can attain from an acquisition of SanDisk and asserted that nothing had materially changed since the date of offer in terms of the synergies Samsung could realise from acquiring SanDisk.