Toshiba to Acquire SanDisk Gear
Toshiba of Japan is buying $1 billion worth of equipment from SanDisk, its joint venture partner, shoring up the California company as it faces an unwanted takeover bid from Samsung.
SanDisk shares have halved in value this year in the face of a worldwide glut in chips, but analysts said the deal with Toshiba might help reverse some of those losses, helping it fend off Samsung Electronics, the No. 1 memory chip maker.
SanDisk, the biggest U.S. maker of flash memory cards, holds key patents in such memory, but the sliding market has left it in breach of key ratings covenants on its debt, and it was expected to announce a sharp drop in quarterly earnings on Monday.
“With banks tightening credit, it was important that Toshiba step in,” said a JPMorgan analyst, Yoshiharu Izumi. “The move could make a takeover by Samsung less likely.”
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