Unispledour Ends Investment in Western Digital, Complicating SanDisk Tie-Up
February 23 2016 - 8:20AM
Dow Jones News
Chip maker Western Digital Corp. said Chinese firm Unisplendour
Corp. had terminated a proposed $3.78 billion investment in the
company, triggering an alternate merger agreement for Western
Digital's $19 billion tie-up with SanDisk Corp.
Shares of SanDisk edged down 0.4% to $67.30 in premarket trading
as Western Digital shares slid 7.4% to $42.71.
The announcement came a day after Alken Asset Management Ltd., a
top shareholder in Western Digital, had urged Western Digital to
walk away from its deal with SanDisk, saying the price tag was too
expensive. It signaled it would vote against stock issuance the
company now needs to complete the deal.
Under the terms of the acquisition outlined in October, Western
Digital and SanDisk had agreed that if the investment by
Unisplendour had not closed by the time the acquisition closed or
had been terminated, Western Digital would alter its cash-stock
combination.
With the Unisplendour deal not closing, Western Digital is set
to pay $67.50 a share in cash instead of $85.10 to buy SanDisk, and
will increase the amount it will pay in stock to 0.2387 share from
0.0176. As of Monday's closing prices, the new offer is valued at
$78.50, compared with the previous terms' $85.91. Shares of Western
Digital have fallen some 40% since the SanDisk deal was unveiled in
October.
The investment by Unisplendour was terminated following a
decision by the Committee on Foreign Investment in the U.S. to
conduct an investigation into the proposed investment.
Western Digital said it still sees the transaction closing in
the second quarter, and has received regulatory approvals in the
U.S., European Union, Japan, Taiwan, South Korea and Turkey.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
February 23, 2016 08:05 ET (13:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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