Western Digital to Buy Memory Chip Maker SanDisk for $19 Billion

A few weeks back, Western Digital Corporation announced that it will acquire the memory chip 
company, SanDisk Corporation in a cash-and-stock deal worth approximately $19 billion. Even though their company is being purchased, SanDisk investors will still receive $86.50 per each share they own, in cash and stock.

            While reading through the article, many interesting points caught my eye. First, the chief executive of Western Digital stated, “The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry” (Bray). Reading this in the beginning of the article made me realize that their sales would now skyrocket and they will see a bigger rise in their profits. Mergers and companies purchasing smaller companies usually will start to see a rise in sales and profits, things companies always wish to see.

            Second, the article later stated how many other large companies acquired smaller companies as well, such as Lam Research acquiring KLA-Tencor, and Microsemi Corporation acquiring the chip maker PMC-Sierra. These couple of paragraphs truly caught my eye due to the fact that I had no idea this was becoming such a commonplace thing to do. I thought larger companies acquiring smaller ones happened every once and a while, but I guess not. These companies will fortunately now see an increase in assets, revenues, and sales, something every company loves.

            The third and last point that I found to be very interesting was the amount of companies and corporations it took to to advice both Western Digital and SanDisk. Although this is not the main point of the article, I had no idea how much effort and advisement went into merging and acquiring different companies. I thought maybe two corporations at most would advise each, but I was incorrect.

            Even though I thoroughly enjoyed the article and learned a lot from it, there are a few more things I would like to have known. First, what exactly a cash-and-stock deal is–for example, what goes into it, how it came about, etc. Second, why did these companies acquire the smaller companies (Western Digital and SanDisk, Microsemi Corporation and PMC, etc.)? Were one of the companies’ sales declining? Lastly, I would have liked to seen the acquirement of SanDisk from more of a financial standpoint as well. Since I am a business major, I would have liked to see the finances involved in this acquirement. Overall however, I enjoyed reading the article, and it taught me things about companies I had never known before.

Works Cited:

Bray, Chad. "Western Digital to Buy Memory Chip Maker SanDisk for $19 Billion." The New

York Times. The New York Times, 21 Oct. 2015. Web. 24 Oct. 2015. <http://www.nytimes.com/2015/10/22/business/dealbook/western-digital-to-buy-memory-chip-maker-sandisk-for-19-billion.html?ref=technology>.

Check out another article about this, but with more financial detail.
http://www.fool.com/investing/general/2015/10/28/did-western-digital-corp-overpay-for-sandisk-corpo.aspx