Western Digital buying SanDisk in deal worth about $19B

Hard disk vendor Western Digital is to buy chip maker SanDisk for around $19 billion as the consolidation of chip-making industry continues.

Western Digital’s presence in this market was minimal, even if in December 2014 WD acquired Skyera, a flash-based storage development company.

Western Digital has been grappling with slow growth in disk drives for laptop and desktop computers as more mobile devices and a few data center equipment have converted to flash memory, which is faster, uses less energy and is less prone to failures than spinning disks, according to The Wall Street Journal. The combination also enables Western Digital to vertically integrate into NAND, giving it long-term access to solid state technology at lower cost.

This acquisition aligns with the long term strategy we have to be a leader of innovation in the storage industry by producing compelling products of high quality with leading edge technology, said CEO at Western Digital Stephen Milligan.

Prior to the acquisition, Western Digital and SanDisk teamed up back in 2013 to create a hybrid drive that combines the platter of an HDD with the NAND flash of an SSD.

Sources: Press materials received from the company and additional information gleaned from the company’s website. Picking up another major flash player like SanDisk could mean big things for future storage wars. “The transaction is expected to be EPS accretive on a non-GAAP basis within 12 months of the transaction close”.

SanDisk is also now in a joint-venture with Toshiba, a competitor of WD, but this won’t be affected by this acquisition.

The company said it expected to enter into new debt facilities totalling $18.4bn, including a $1.0bn revolver, a portion of which will be used to fund the deal.

While the board of directors of both companies agreed to the transaction, it is still subject to shareholder and regulatory approval. Rumors of the sale helped boost the value of shares in SanDisk to $86.50 as of the time of the deal, up from less than $60 before reports began to circulate.