SanDisk Said to Be Working With Bank to Explore a Sale

  • Chipmaker has drawn interest from Micron, Western Digital
  • A deal would likely need blessing from flash partner Toshiba

Chipmaker SanDisk Corp. hired a bank to explore a potential sale of the business and has received interest from two of its rivals, people with knowledge of the matter said.

Micron Technology Inc. and Western Digital Corp. are in talks with SanDisk about a possible acquisition, said the people, who asked not to be identified because the process is private. SanDisk, based in Milpitas, California, operates flash-memory plants with Toshiba Corp. in Japan, and would likely need Toshiba’s blessing for a deal.

No decision has been made and talks with the companies may not result in a transaction, the people said. SanDisk had a market value of about $12.6 billion as of Tuesday’s close. The company’s shares rose 11 percent to $68.70 at the close Wednesday in New York, the highest price since May 28.

SanDisk is one of the largest makers of flash memory, a type of chip that’s used as storage in mobile devices and increasingly in computers and data centers. Micron is a rival supplier of the technology and Western Digital, which makes hard drives based on spinning magnetic disks, may want to add a source of flash-memory chips to keep future products competitive.

Micron Complication

“We believe that Western Digital makes sense as an acquirer” at a total deal cost of about $15 billion, given the risk to the hard-drive market from flash memory, Deepon Nag, an analyst at Macquarie Group Ltd., wrote in a note to investors. A deal with Micron also make sense but could be complicated by a technology partnership it has with Intel Corp., Nag wrote.

Representatives for SanDisk and Irvine, California-based Western Digital didn’t respond to requests for comment. A spokesman for Boise, Idaho-based Micron said the company doesn’t comment on rumors.

This year to date has been the biggest ever for semiconductor mergers and acquisitions. Companies in the $300 billion industry are facing rising costs and a shrinking customer base, encouraging them to get together to add scale. Last month Western Digital got a $3.8 billion investment from China’s Tsinghua University, adding to its funds available to make deals.  

SanDisk and Micron compete with the larger Samsung Electronics Co., which dominates the market for memory chips and is also one of the biggest consumers of the storage semiconductors via its handset division. Flash memory chips are much faster at reading and writing data and use less energy making them increasingly attractive as storage in data centers run by companies such as Google and Amazon.com Inc.

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