| Tech Stock News and Analysis |
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| Monday, July 31, 2006 |
SanDisk to Buy M-Systems for $36 Per Share in All-Stock, $1.56B Deal
-- Flash memory maker SanDisk Corp. said Monday it agreed to acquire Israeli competitor M-Systems Flash Disk Pioneers Ltd., in a $1.56 billion all-stock deal.
The transaction values M-Systems at $36 per share, a 26 percent premium over the average closing price of M-Systems' shares over the last month. M-Systems had roughly 38 million outstanding shares as of July 28.
The deal is expected to close in the fourth quarter, and is subject to several factors including Israeli court and regulatory approval. SanDisk estimates that the M-Systems purchase will grow its earnings on a cash operating basis by the end of 2007.
Rumors began surfacing of a possible deal last week, when Israeli media reported that SanDisk offered to buy M-Systems for $1.5 billion.
M-Systems is one at least 61 companies under review by the Securities and Exchange Commission or the Department of Justice for allegedly backdating stock option grants to coincide with share lows to boost executive profits. There are at least another 18 companies conducting internal reviews of their stock option grant practices.
Shares of M-Systems soared on the news, jumping $4.08, or 12.8 percent, to $35.87, in afternoon trading on the Nasdaq. SanDisk shares dropped 70 cents to $46.44. |
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