South Korean electroincs giant Samsung has announced it is abandoning its efforts to take over SanDisk, a leading maker of flash memory and portable media players. Although the companies have been dancing around each other for almost six months, SanDisk rejected a $5.8 billion takeover offer from Samsung, and that apparently soured the relationship.
Samsung vice chairman and CEO Yoon Woo Lee didn’t mince words calling off the deal: “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.”
Toshiba and SanDisk just announced a new agreement that restructures how the companies split the output of two flash manufacturing facilities in Japan they operate under a joint venture. The companies used to split the output 50-50; the new arrangement amounts to 65-35.
For it’s part, SanDisk blames the breakdown in negotiations on Samsung, saying it laid out plans for further negotiations, but Samsung simply never responded. “We repeatedly outlined a clear path to hold further discussions, including most recently in our letter on September 15,” the company wrote in a press release. “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.”
Samsung withdrawing its $26/share offer for SanDisk doesn’t mean the companies can’t hook up in the future—both say they’re open to the idea—but the tone of the public exchange seems to indicate the firms will at least need a cooling-down period before they start planning a future together.
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