Western Digital buys SanDisk in 1.23 lakh crore

Global computer disk drive leader Western Digital announced on Wednesday that it will pay $19 billion (Rs 1.23 lakh crore) for flash memory specialist SanDisk, the latest mega-deal in computer storage.

The news comes one week after Dell unveiled plans to buy EMC, the world's largest data-storage provider, for $67 billion (Rs 43.60 lakh crore) in a record tech tie-up.

Western said the acquisition will help transform it into a data storage solutions company "with global scale, extensive product and technology assets, and deep expertise." The merger of the two California data storage firms would create a company combined global sales of more than $21 billion (Rs 13.66 lakh crore) last year.

The two companies said in a statement that Western Digital will double the market available to it, and that the combination will take it into higher growth segments in the memory storage market.

SanDisk especially brings to the union capabilities in NAND memory, common in USB flash drives and other memory cards.

The takeover comes just on the heels of Western's agreement to allow China's Unisplendour Corp, a state-controlled technology investment and development firm, to take a 15% share in Western.

That appeared to contribute to the decision announced Monday that China's Ministry of Commerce to remove restrictions on Western's China business that arose when it took over Hitachi's hard drive business in 2011, which made the company the world's largest disk drive maker.

The SanDisk deal "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 Western chief executive Steve Milligan in a statement.

"The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry."

The deal values SanDisk at $86.50 a share, 23.6% higher than the shares were on Friday before the first reports of a deal surfaced.

Western will pay for the takeover largely with borrowed funds, but stressed its "strong track record of integrating acquisitions to create value."

It said it will continue to pay a dividend but suspend its share buyback program as it proceeds with the takeover.