Hong Kong - Western Digital will buy SanDisk for $15.8 billion, sticking with plans to combine the makers of memory chips after a potential Chinese investor backed out of another deal amid a national security probe.
Western Digital will pay $78.50 a share in cash and stock for SanDisk, 16 percent more than Monday’s closing price, according to a statement Tuesday.
China’s Tsinghua Unisplendour pulled the plug on its $3.8 billion investment after learning that the Committee on Foreign Investment in the United States, which can block foreign takeovers of US companies, will investigate the transaction.
The scrapped deal comes amid heightened concern over Chinese investment in US technology firms and the Asian country’s effort to build semiconductor know-how by acquiring American firms.
Chinese investors are undergoing the most CFIUS reviews and their interest in US technology has drawn fire from lawmakers worried about risks to national security.
Read also: SanDisk forecasts fall short of estimates
Canceling the investment, which would have made the Chinese group Western Digital’s largest shareholder, is the latest blow to that country’s attempts to acquire access to US technology as it tries to boost its domestic capabilities and replace exports. Fairchild Semiconductor International Inc. decided to go with a takeover proposal from On Semiconductor, passing up a higher offer from a Chinese group on the grounds it might not get US regulator approval.
The scrapped deal would have given Unisplendour, a business unit of China’s prestigious Tsinghua University, a Western Digital board seat. Unisplendour didn’t immediately respond to a phone call and e-mail seeking comment on the announcement.
SanDisk’s owners will get $67.50 a share in cash and 0.2387 a Western Digital share for each share of the target company.
BLOOMBERG