Western Digital Corporation has announced it has reached an agreement to buy the flash memory maker SanDisk Corporation. Western Digital will pay $86.50 for each SanDisk share of which $85.10 in cash and the rest in shares for a total of about $19 billion. SanDisk CEO Sanjay Mehrotra will join Western Digital’s board of directors.
SanDisk is a company founded in 1988 that produces NAND memories. We’re talking about flash memories ranging from memory cards for devices such as digital cameras to SSDs. Together with Toshiba, SanDisk is also developing NAND 3D technologies, the solid state disks where various layers are placed one above the other to increase their capacity.
Founded in 1970, Western Digital is a company known as a hard disk producer but also of other storage systems. So far the company offered mainly classic hard disks and NAND-technology products of other companies through trade agreements. Flash memories are slowly increasing their share of the market with falling prices and increasing capacity. For a classics hard disk manufacturer this was a problem and for some time there have been rumors of an interest in SanDisk.
The new giant in the storage filed, which will still be led by Steve Milligan, current Western Digital CEO, will keep on offering classic hard disks as long as the market will require them but is also a manufacturer of flash memories. This ensures the company a future with a leading role, also because a quick confirmation came that the cooperation with Toshiba will continue. It’s an important factor in this agreement precisely because it ensures a continuation of the development of NAND technologies.
This acquisition seems small compared to the $67 billion paid by Dell to buy EMC, a deal announced just last week. However, it’s still a big deal because it moves significantly the relationships among storage suppliers. Western Digital was already a giant in the branch but produced on its own only classic hard disks, a market that is slowly losing shares. Now for the company the situation changes in a positive way becoming a manufacturer of flash memories with a wide range of applications.
