Manila, Philippines — October 22, 2015 — Western Digital®
Corporation (NASDAQ: WDC) and SanDisk Corporation (NASDAQ: SNDK) today
announced that they have entered into a definitive agreement under which
Western Digital will acquire all of the outstanding shares of SanDisk for a
combination of cash and stock. The offer values SanDisk common stock at US$86.50
per share or a total equity value of approximately US$19 billion, using a
five-day volume weighted average price ending on October 20, 2015 of US$79.60
per share of Western Digital common stock. If the previously announced
investment in Western Digital by Unisplendour Corporation Limited closes prior
to this acquisition, Western Digital will pay US$85.10 per share in cash and
0.0176 shares of Western Digital common stock per share of SanDisk common
stock; and if the Unisplendour transaction has not closed or has been
terminated, US$67.50 in cash and 0.2387 shares of Western Digital common stock
per share of SanDisk common stock. The transaction has been approved by the
boards of directors of both companies.
The combination is the next step in the transformation of
Western Digital into a storage solutions company with global scale, extensive
product and technology assets, and deep expertise in non-volatile memory (NVM).
With this transaction, Western Digital will double its addressable market and
expand its participation in higher-growth segments. SanDisk brings a 27-year
history of innovation and expertise in NVM, systems solutions and
manufacturing. The combination also enables Western Digital to vertically integrate
into NAND, securing long-term access to solid state technology at lower cost.
The proposed combination creates significant value for both
SanDisk and Western Digital shareholders. Western Digital brings a successful
track record of M&A with a number of acquisitions over the last several
years helping to fuel innovation, create value and strongly position the
company to capture higher-growth opportunities. In addition, Western Digital's
operational excellence, coupled with the recently announced decision by China's
Ministry of Commerce (MOFCOM) allowing Western Digital to integrate substantial
portions of its WD and HGST businesses, is expected to generate additional cost
synergies.
"This transformational acquisition aligns with our
long-term strategy to be an innovative leader in the storage industry by
providing compelling, high-quality products with leading technology," said
Steve Milligan, chief executive officer, Western Digital. "The combined
company will be ideally positioned to capture the growth opportunities created
by the rapidly evolving storage industry. I'm excited to welcome the SanDisk
team as we look to create additional value for all of our stakeholders,
including our customers, shareholders and employees."
"Western Digital is globally recognized as a leading
provider of storage solutions and has a 45-year legacy of developing and
manufacturing cutting-edge solutions, making the company the ideal strategic
partner for SanDisk," said Sanjay Mehrotra, president and chief executive
officer, SanDisk. "Importantly, this combination also creates an even
stronger partner for our customers. Joining forces with Western Digital will
enable the combined company to offer the broadest portfolio of
industry-leading, innovative storage solutions to customers across a wide range
of markets and applications."
Western Digital and SanDisk's complementary product lines,
including hard disk drives ("HDDs"), solid-state drives
("SSDs"), cloud datacenter storage solutions and flash storage
solutions, will provide the foundation for a broader set of products and
technologies from consumer to datacenter. Both companies have strong R&D
and engineering capabilities and a rich base of fundamental technologies with
over 15,000 combined patents issued or pending worldwide.
Toshiba has been a long-term strategic partner to SanDisk
for 15 years. The joint venture (JV) with Toshiba will be ongoing, enabling
vertical integration through a technology partnership driven by deep
collaboration across design and process capabilities. The JV provides stable
NAND supply at scale through a time-tested business model and extends across
NVM technologies such as 3D NAND.
Steve Milligan will continue to serve as chief executive
officer of the combined company, and the company will remain headquartered in
Irvine, California. Upon closing, Sanjay Mehrotra is expected to join the
Western Digital Board of Directors.
Led by a seasoned management team, Western Digital has a
strong track record of integrating acquisitions to create value. The company
expects to achieve full annual run-rate synergies of US$500 million within 18
months post-closing. The transaction is expected to be EPS accretive on a
non-GAAP basis within 12 months of the transaction close. Pending the closing
of the transaction, Western Digital expects to continue paying its quarterly
dividend and plans to suspend its share buyback program.
The transaction will be financed by a mix of cash, new debt
financing and Western Digital stock. In
connection with the transaction, Western Digital expects to enter into new debt
facilities totaling US$18.4 billion, including a US$1.0 billion revolving
credit facility. The proceeds from the new debt facilities are expected to be
used to pay part of the purchase price, refinance existing debt of Western
Digital and SanDisk and pay transaction related fees and expenses. If SanDisk's
cash balance falls below certain thresholds at the time of transaction close,
the merger agreement provides for an adjustment to the mix of cash and stock
consideration.
The transaction is subject to approval by SanDisk
shareholders and, in the event that the Unisplendour transaction does not
close, Western Digital shareholders, receipt of regulatory approvals and other
customary closing conditions. The transaction is expected to close in the third
calendar quarter of 2016.
BofA Merrill Lynch and J.P. Morgan are acting as lead
financial advisors to Western Digital and will provide committed financing for
the transaction. Also, Credit Suisse is acting as a financial advisor and
providing committed financing, and RBC Capital Markets is providing committed
financing. Cleary Gottlieb Steen & Hamilton LLP and Baker & McKenzie
are acting as legal advisors to Western Digital.
Goldman Sachs is acting as the exclusive financial advisor
to SanDisk. Skadden, Arps, Slate, Meagher & Flom LLP is acting as the
exclusive legal advisor to SanDisk.
About
Western Digital
Founded
in 1970, Western Digital Corp. (NASDAQ: WDC), Irvine, Calif., is an
industry-leading developer and manufacturer of storage solutions that enable
people to create, manage, experience and preserve digital content. It is a
long-time innovator in the storage industry. Western Digital is responding to
changing market needs by providing a full portfolio of compelling, high-quality
storage products with effective technology deployment, high efficiency,
flexibility and speed. Its products are marketed under the HGST and WD brands
to OEMs, distributors, resellers, cloud infrastructure providers and consumers.
Financial and investor information is available on the company's Investor
Relations website at investor.wdc.com.
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 27 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 smartphones, tablets and PCs. SanDisk's
consumer products are available at hundreds of thousands of retail stores
worldwide. For more information, visit www.sandisk.com.