SanDisk snapped up by Western Digital in $19bn deal

Western Digital plays catch-up in flash memory with SanDisk purchase

Western Digital has, as rumours over the past week indicated, swooped to buy SSD specialist SanDisk in a $19bn cash and stock deal.

The acquisition will help bail SanDisk out of a tight spot after its foray into the enterprise flash market proved more challenging than expected, while for Western Digital it will extend its expertise and product line in flash storage, a fast-growing sector of the market in which it has little presence.

SanDisk had been widely rumoured to be on the market and searching for a buyer, with both Western Digital and semiconductor company Micron touted as the most likely purchasers.

Western Digital CEO Steve Milligan described the deal as a "transformational acquisition" that "aligns with our long-term strategy to be an innovative leader in the storage industry". Milligan will remain in place as CEO of the company, while SanDisk CEO Sanjay Mehrotra will join Western Digital's board of directors.

The deal is subject to SanDisk shareholders' approval, as well as that of the regulators. Between them, the two companies own some 15,000 storage-related patents, but their product lines are largely complementary.

However, both companies have been struggling for growth in the past year.

Western Digital reported revenues down for $3.7bn to $3.2bn in its last reported quarter, to 3 July. SanDisk, meanwhile, has struggled to take advantage of high demand for SSDs, with quarterly revenues out today down by 17 per cent, year-on-year, to $1.45bn. It's net income was also halved in the same period to $133m.

While the conventional hard-disk drive market has been consolidated down to just three big players - Toshiba, Seagate and Western Digital - the market for flash and SSDs is much broader, with competition between a wider range of players, which include Samsung and Intel, helping to drive down prices in recent years.