Samsung Electronics today dropped its $5.9 billion takeover offer of SanDisk, claiming the global credit turmoil and bleak economic growth outlook are the reasons behind the withdrawal.
"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,” Samsung CEO Lee Yoon Woo said in a letter to SanDisk's board of executives.
"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," Lee also wrote.
SanDisk officials repeatedly said they aren't interested in Samsung's offer, and the deal likely wouldn't have been approved by the U.S. Department of Justice, who was watching the deal closely.
(Image courtesy of the AP)
The California-based company refused the the unsolicited Samsung offer because the $5.9 billion offer, or $26 per share, was too low, and it was an opportunistic bid that came as the company's stock prices were falling.
SanDisk's board fired back at Samsung with the following statement: "From the start of this process SanDisk’s Board has remained open to a transaction that recognizes SanDisk’s long-term value and contains the right protections for SanDisk's shareholders."
"We repeatedly outlined a clear path to hold further discussions, including most recently in our letter on September 15, and Samsung consistently chose to ignore that path and, in fact, never contacted SanDisk regarding their proposal after we delivered our letter. We believe this raises questions about the real motivations behind Samsung’s offer."
SanDisk's stock has fallen below $26, and took another significant hit after Samsung announced it is no longer interested in the flash memory giant. This morning on Wall Street, the company's stock price dropped 27 percent down to $10.60 per share.
