Unispledour Ends Investment in Western Digital, Complicating SanDisk Tie-Up

Chip maker Western Digital Corp. said Chinese firm Unisplendour Corp. had terminated a proposed $3.78 billion investment in the company, triggering an alternate merger agreement for Western Digital's $19 billion tie-up with SanDisk Corp.

Shares of SanDisk edged down 0.4% to $67.30 in premarket trading as Western Digital shares slid 7.4% to $42.71.

The announcement came a day after Alken Asset Management Ltd., a top shareholder in Western Digital, had urged Western Digital to walk away from its deal with SanDisk, saying the price tag was too expensive. It signaled it would vote against stock issuance the company now needs to complete the deal.

Under the terms of the acquisition outlined in October, Western Digital and SanDisk had agreed that if the investment by Unisplendour had not closed by the time the acquisition closed or had been terminated, Western Digital would alter its cash-stock combination.

With the Unisplendour deal not closing, Western Digital is set to pay $67.50 a share in cash instead of $85.10 to buy SanDisk, and will increase the amount it will pay in stock to 0.2387 share from 0.0176. As of Monday's closing prices, the new offer is valued at $78.50, compared with the previous terms' $85.91. Shares of Western Digital have fallen some 40% since the SanDisk deal was unveiled in October.

The investment by Unisplendour was terminated following a decision by the Committee on Foreign Investment in the U.S. to conduct an investigation into the proposed investment.

Western Digital said it still sees the transaction closing in the second quarter, and has received regulatory approvals in the U.S., European Union, Japan, Taiwan, South Korea and Turkey.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

February 23, 2016 08:05 ET (13:05 GMT)

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