SanDisk Completes Acquisition of Fusion-io
July 23 2014 - 9:00AM
Business Wire
Acquisition to Boost SanDisk’s Enterprise
Growth
SanDisk Corporation (NASDAQ: SNDK), a global leader in flash
storage solutions, today announced it has completed the previously
announced acquisition of Fusion-io, a leading developer of
flash-based PCIe hardware and software solutions that enhance
application performance in enterprise and hyperscale
datacenters.
“I am delighted to welcome the employees of Fusion-io to
SanDisk. The tremendous engineering and go-to-market talent of the
Fusion-io team will accelerate our efforts to enable the
flash-transformed data center,” said Sanjay Mehrotra, president and
chief executive officer of SanDisk. “Together we will offer our
customers the broadest set of enterprise flash solutions in the
industry.”
Under the terms of the agreement, SanDisk completed the
acquisition for $11.25 per share for the outstanding shares of
Fusion-io, and assumed unvested, in-the-money equity awards, for a
total aggregate value of approximately $1.1 billion, net of cash
assumed.
SanDisk’s third quarter financial results will include the
results of Fusion-io from July 23, 2014 through September 28, 2014.
SanDisk expects to exclusively use non-captive memory for the
Fusion-io business for at least the next several quarters.
SanDisk’s GAAP P&L results will be impacted by:
- Transaction, restructuring and
integration costs, which are expected to be incurred over several
quarters as integration takes place;
- Reduction of revenue related to support
and maintenance services due to the effects of purchase accounting
on Fusion-io’s deferred revenue;
- Inventory step-up charges related to
recording Fusion-io inventory at fair value based on purchase
accounting requirements;
- Charges for the amortization of
acquisition-related intangible assets; and
- Stock compensation for the assumption
and new issuance of employee equity incentives.
SanDisk’s non-GAAP P&L results will be impacted by
cash-related charges for transaction, restructuring, and
integration costs as well as the reduction of support and
maintenance revenue due to the effects of purchase accounting.
SanDisk expects the acquisition to be dilutive to non-GAAP earnings
in the near term primarily due to charges for transaction,
restructuring and integration costs, which are expected to be
approximately $35 million in the third quarter of 2014 and
approximately $15 million in the fourth quarter of 2014, as well as
operating losses from Fusion-io partially offset by modest
near-term synergies. The acquisition is expected to be accretive to
non-GAAP earnings in the second half of 2015.
Details of Tender Offer and Acquisition
Completion
The acquisition was effected through a tender offer followed by
a merger. The tender offer for Fusion-io’s stock, which was made at
$11.25 per share, net to the seller in cash, without interest
thereon and less any applicable withholding taxes, expired at 12:00
midnight, New York City time, at the end of the day on July 22,
2014. As of the expiration of the tender offer, a total of
66,901,782 shares, representing approximately 61.02% of Fusion-io’s
outstanding common stock, were validly tendered into and not
validly withdrawn from the tender offer. In addition, notices of
guaranteed delivery were delivered with respect to 6,879,953
shares, representing approximately 6.27% of Fusion-io’s outstanding
common stock. All validly tendered shares have been accepted for
payment, which will be made in accordance with the terms of the
tender offer.
SanDisk and Fusion-io subsequently completed the acquisition by
merging a subsidiary of SanDisk with and into Fusion-io, with
Fusion-io continuing as the surviving corporation. In the merger,
each share of Fusion-io’s common stock issued and outstanding
immediately prior to the effective time of the merger, other than
shares held by SanDisk, Fusion-io, and Fusion-io’s stockholders who
properly perfect their statutory appraisal rights under Delaware
law, was canceled and converted into the right to receive the
$11.25 per share offer price in cash, without interest thereon and
less any applicable withholding taxes.
As a result of the completion of the merger, Fusion-io has
become a wholly-owned subsidiary of SanDisk. Fusion-io’s shares
ceased trading on the NYSE at the close of market on July 22, 2014,
and will no longer be listed.
ABOUT SANDISK
SanDisk Corporation (NASDAQ: SNDK), a Fortune 500 and S&P
500 company, is a global leader in flash storage solutions. For
more than 25 years, SanDisk has expanded the possibilities of
storage, providing trusted and innovative products that have
transformed the electronics industry. Today, SanDisk’s quality,
state-of-the-art solutions are at the heart of many of the world's
largest data centers, and embedded in advanced smart phones,
tablets and PCs. SanDisk’s consumer products are available at
hundreds of thousands of retail stores worldwide. For more
information, visit www.sandisk.com.
© 2014 SanDisk Corporation. All rights reserved. SanDisk and the
SanDisk logo are trademarks of SanDisk Corporation, registered in
the United States and other countries. Other brand names mentioned
herein are for identification purposes only and may be the
trademarks of their respective holder(s).
This news release contains certain forward-looking statements,
including those relating to the expected strategic benefits and
synergies of SanDisk’s acquisition of Fusion-io, the growth of
SanDisk’s business in the enterprise storage space, the growth of
SanDisk’s product portfolio, SanDisk’s expectations regarding the
use of non-captive memory for the Fusion-io business, when SanDisk
expects the acquisition to be accretive, the impact of the
acquisition on SanDisk’s GAAP and non-GAAP financial results,
including expected transaction, restructuring and integration
charges, which are based on current expectations and involve
numerous risks and uncertainties that may cause these
forward-looking statements to be inaccurate. Risks that may cause
these forward-looking statements to be inaccurate include among
others:
- SanDisk may not be able to effectively
assimilate and integrate Fusion-io operations, personnel,
technologies, products and information systems;
- SanDisk may experience delays in the
integration of Fusion-io and, accordingly, SanDisk may not achieve
the expected benefits from the acquisition in a timely manner or at
all;
- SanDisk may not be able to realize the
expected cost savings or other synergies from the acquisition in a
timely manner or at all;
- SanDisk may experience delays in
leveraging or failure to leverage Fusion-io’s go-to-market
capabilities to generate revenues for SanDisk’s products;
- SanDisk may not be able to maintain and
grow or maintain the customer relationships required to achieve its
anticipated revenue and margins from the acquisition;
- Fusion-io’s products or technologies
may not perform as expected or could fail to meet customer
qualification requirements;
- the enterprise storage space may not
grow as expected;
- Fusion-io’s key personnel may decide
not to work for SanDisk for a long period after the acquisition, or
at all;
- the integration of Fusion-io’s
business, personnel and operations may disrupt SanDisk’s ongoing
business, distract its management and employees, harm its
reputation and increase its expenses;
- the acquisition may make it more
difficult to establish or maintain relationships with employees,
customers, suppliers or other business partners of SanDisk or
Fusion-io;
- SanDisk may incur one-time charges,
increased contingent liabilities, adverse tax consequences,
depreciation or deferred compensation charges, amortization of
intangible assets or impairment of goodwill, which could harm its
results of operations; and
- the other risks detailed from
time-to-time under the caption “Risk Factors” and elsewhere in
SanDisk’s U.S. Securities and Exchange Commission filings and
reports, including, but not limited to, its Quarterly Report on
Form 10-Q for the quarter ended March 30, 2014 and its Annual
Report on Form 10-K for the fiscal year ended December 29,
2013.
SanDisk CorporationInvestor Contacts:Jay Iyer,
408-801-2067jay.iyer@sandisk.comorBrendan Lahiff,
408-801-1732brendan.lahiff@sandisk.comorMedia
Contact:Michael Diamond,
408-801-1108michael.diamond@sandisk.com
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