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WD, SanDisk Move Forward in Acquisition Deal

SanDisk Shanghai office

Looks like Western Digital’s acquisition of SanDisk is moving forward, as the hard drive maker’s shareholders have given a green light to offer common stock as part of the SanDisk deal. In turn, SanDisk’s shareholders have also approved of the Western Digital acquisition, making the transaction a done deal thus far.

Western Digital’s shareholders held a special meeting on Tuesday. Around 90% of the shareholder group voted in favor of the stock issuance in the SanDisk deal. However, that number is merely a preliminary account, as the company will release the actual numbers in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission.

Western Digital said that it expects to close the SanDisk deal during the second quarter, the April/June 2016 timeframe. The company has already received regulatory approvals from the likes of the United States, EU, Japan, Taiwan, and four other countries. However, the transaction is still waiting on a regulatory approval in China and could face possible “customary closing conditions.”

“We are pleased to receive the support of both our shareholders and SanDisk’s, marking another milestone on our journey to transform Western Digital into the leading storage solutions company,” said Steve Milligan (Chief Executive Officer, Western Digital). “This combination brings together two tremendous companies and cultures ideally positioned to capture the growth opportunities in our rapidly evolving industry. We look forward to completing the transaction and working with SanDisk to create significant value for our combined shareholders, customers, and employees.”

In a separate announcement, SanDisk said that in a special stockholders meeting, 98% of the votes regarding the Western Digital acquisition were in favor of the transaction. Sanjay Mehrotra (President and Chief Executive Officer, SanDisk), added that the combined companies will offer a broad portfolio of “innovative storage solutions” to customers “across a wide range of markets and applications.”

Western Digital announced its plans to acquire SanDisk back in October 2015, offering a deal that consists of a combination of cash and stock. The company will pay $85.10 per share in cash and 0.0176 shares of Western Digital common stock per share of SanDisk common stock if Unisplendour Corporation Limited’s (UCL) investment deal in Western Digital closes prior to the SanDisk acquisition. If the UCL deal doesn’t close or is terminated for some reason, Western Digital will pay $67.50 in cash and 0.2387 shares of Western Digital common stock per share of SanDisk common stock. The overall value of the deal remains the same.

Western Digital said this acquisition will double its addressable market and allow it to vertically integrate into NAND so that it can access solid state technology at a lower cost. SanDisk will also be able to continue its partnership with Toshiba, which will bring a stable supply of NAND at scale, the company said, including upcoming Non-Volatile Memory (NVM) technologies such as 3D NAND.

“The transaction will be financed by a mix of cash, new debt financing and Western Digital stock,” Western Digital said. “In connection with the transaction, Western Digital expects to enter into new debt facilities totaling $18.4 billion, including a $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.”

Just like Western Digital Corporation, SanDisk is based out of California. The company offers a number of products including flash cards, USB flash drives, SIM cards, digital audio players, and SSDs. The company just announced at the beginning of March that it has collaborated with Intel to provide software-defined all-flash storage solutions for data canters. These solutions utilize SanDisk’s InfiniFlash System, which integrates IBM’s Spectrum Scale file system.