Memory chip maker SanDisk Corporation is negotiating a purchase with hard disk drive maker Western Digital Corporation and Chipmaker Micron Technology Inc., said a Bloomberg report on Tuesday.
Bloomberg quotes sources familiar with the subject claiming that SanDisk asked help from a bank in the merging process. Voices inside SanDisk pointed out that the talks may end without any final resolution, as no firm conclusion was reached.
The total value of SanDisk was around $12.6 billion on Tuesday, after the stock value of the flash-memory producer surged 12 percent. During the same transaction day, shares of Western Digital rose with no more than 1 percent and those of Micron with 3 percent.
While some financial analysts are startled by the acquisition talks, as they point out that Micron is already a name in the flash memory operation, others underline that the global situation supports such a measure. The price of flash-drives is plummeting for a while now, and the wares are thinning down at a constant rate. These are good reasons for big producers to tighten the ranks and add some leverage by joining forces.
Western Digital specializes in the production of standard hard drives, but SanDisk is more tech forward, its flash-memory chips find good use in SSD drives. A solid-state drive is the significantly faster and more stable version of a hard-disk drive, like the ones manufactured by Western Digital.
Rumors say that a Chinese business consortium was interested in the purchase of SanDisk, marking China's ambitions to accelerate its emerging chip industry. Nomura analyst Romit Shah estimated that the California-based flash-memory producer would not sign any contract that puts less than $90 per share.
Micron already received offers from Tsinghua Unigroup Ltd, a government-supported investment group. The price proposed for Micron was $23 billion, but talks stopped after concerns involving U.S. security ensued.
Western Digital did reach an agreement with Tsinghua's unit, who affirmed in September that an investment of $3.78 billion will go to Western Digital. Due to the cash flow, Western Digital may now approach the flash and solid-state storage developments.
SanDisk, Western Digital and Micron, that are competing over a market of $300 billion, were not immediately available for comment.