Hard disk drive maker Western Digital Corp said it would buy memory chip maker SanDisk Corp for about $19 billion (roughly Rs. 1,23,765 crores), the latest in a wave of consolidation in the chip-making industry.
The cash-and-stock offer values SanDisk at $86.50 (roughly Rs. 5,630) per share, or a total equity value of about $19 billion, using a five-day volume weighted average price ending on Oct. 20 of $79.60 (roughly Rs. 5,185) per share of Western Digital stock.
SanDisk's shares rose 6.4 percent to $80 in pre-market trading. Western Digital's shares were down 1.1 percent at $74.
Demand for cheaper chips and new products to power Internet-connected gadgets, as well as a push from technology companies to consolidate suppliers, has led to record levels of dealmaking in the semiconductor sector this year.
The value of the SanDisk acquisition will depend on the closing and approval of an investment from a unit of China's state-backed Tsinghua Holdings Co Ltd, Unisplendour Corp Ltd in Western Digital, the companies said on Wednesday.
The deal is expected to close in the third calendar quarter of 2016.
Steve Milligan, chief executive officer, Western Digital, said "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. 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".
Sanjay Mehrotra, president and chief executive officer, SanDisk, said, "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. 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".
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