Western Digital says China's Unisplendour drops investment plan

Tue Feb 23, 2016 8:59am EST
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By Arathy S Nair

(Reuters) - Western Digital Corp (WDC.O: Quote) said China's Unisplendour Corp Ltd (000938.SZ: Quote) backed out from buying a stake in the hard-disk maker, forcing the U.S. company to cut the price of its proposed offer for rival SanDisk Corp SNDK.O by 9 percent.

Unisplendour, a unit of China's state-backed Tsinghua Holdings Co Ltd, had said in September it would buy a 15 percent stake in Western Digital for $3.78 billion.

The Chinese company scrapped its investment plan after a decision by the Committee on Foreign Investment in the United States (CFIUS) to investigate the deal, Western Digital said.

Western Digital shares were down 7.4 percent in premarket trading. Shares of SanDisk, which the latest offer values at $15.78 billion, were down 3.2 percent.

SanDisk did not immediately reply to requests for comment.

Western Digital affirmed its commitment to buy SanDisk Corp SNDK.O on Tuesday, the day after shareholder Alken Asset Management asked the company to drop the deal, saying the price was too high.

Western Digital, which reached a deal to buy SanDisk for $19 billion in October, had said then it would revise the cash-and-stock offer if the Unisplendour investment fell through.

Based on Western Digital's Monday close, the company said it would now pay $78.50 per share in cash and stock for SanDisk, compared with its previous offer of $86.50.   Continued...

A variety of SanDisk memory cards are seen with a Western Digital hard drive box in Golden, Colorado in this photo illustration October 21, 2015. REUTERS/Rick Wilking