SanDisk has just announced an estimated loss of $250 million and an intention to lay off employees for cost cutting. As a result, Samsung sent a letter to SanDisk’s board of directors stating that the former is not interested anymore in buying products from the latter considering a big amount of risk in the offer.
Below is the concise main body of the Samsung’s letter to Sandisk:
After nearly six months of efforts to pursue a transaction with no meaningful progress, we are withdrawing our proposal to acquire ScanDisk. I am disappointed that we have been unable to reach an agreement on our proposal. I continue to believe that a combination of our two companies would have created a superior global brand, an unparalleled technology platform and the scale and resources to drive convergence in the marketplace. Had we been able to execute on our proposal, your shareholders would have received full, fair and certain value for their shares and your employees and other stakeholders would have benefited from a broader platform and a wider range of opportunities.
Nevertheless, we have obligations to our own shareholders which require that we take a disciplined approach, particularly with respect to significant initiatives such as this. That disciplined approach requires that we squarely face the growing uncertainties in your business, which may continue to deteriorate in this difficult economic environment and further impact your standalone value. Your recently announced third quarter results serve only to illustrate this risk. Your surprise announcements of a quarter billion dollar operating loss, a hurried renegotiation of your relationship with Toshiba and major job losses across your organization all point to a considerable increase in your risk profile and a material deterioration in value, both on a stand-alone basis as well as to Samsung. As a result of these developments, we are no longer interested in acquiring SanDisk at $26/share.
While I regret that we were unable to work together to achieve a business combination that would have created new opportunities for all of us, we wish you the best in meeting the challenges ahead.
