SanDisk turns down Samsung's 5.85-billion-dollar takeover offer

Seoul - US memory card maker SanDisk Corp has rejected Samsung Electronics Co's hostile 5.85-billion-dollar takeover bid, calling it "inadequate."

In a statement released after the markets closed Tuesday in the United States, the Milpitas, California-based SanDisk said its board unanimously decided against the South Korean electronic giant's 26-dollar-per-share offer because it "significantly undervalues SanDisk given the long-term prospects of its business."

Samsung retorted Wednesday that its 26-dollar-per-share cash offer represented a premium of 80 per cent of Monday's stock price and SanDisk "continues to cling to unrealistic expectations on both its standalone market value and an appropriate merger price."

It said the two companies had been in talks for four months and Samsung was "deeply disappointed" that SanDisk's board had rejected its offer.

A merger with SanDisk, the inventor and world's largest supplier of flash storage cards, would be the largest undertaken by Samsung, the world's second-largest chipmaker.

It would improve the Suwon, South Korea-based company's leading position against Japan's Toshiba Corp in the flash memory chip arena and save it licensing costs of 
350 million dollars per year that it must now pay to use the flash-memory technology patented by the US firm.

Flash memory chips are used to store music and pictures on digital devices such as cameras and MP3 players.

Samsung made its bid public after SanDisk's board sent it a rejection letter Monday, and Lee Yoon Woo, who took over as Samsung's chief executive in May, said his company would continue to seek a "mutually agreeable" deal.

SanDisk's board said it "remains open-minded about a transaction that appropriately addresses the issues of value."

SanDisk has been struggling this year as an oversupply of flash memory chips on the market has driven down prices, leading to losses for the company and a 59-per-cent drop in its share price.

"We believe Samsung's proposal does not provide appropriate value to our stockholders and is opportunistically timed at the trough of an industry-wide downturn," said Eli Harari, SanDisk chairman and chief executive. "In our view, this proposal fails to recognize the value of our patent portfolio, in particular to Samsung." (dpa)

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