Share prices of SanDisk Corporation went record high after acquisition news came out
After the news of Samsung Electronics Co., Ltd. (SEO: 005930) buying up SanDisk Corporation (NASDAQ:SNDK) spread out, share prices of SanDisk skyrocketed. In Nasdaq, the price jumped by 29% from $3.76 to $17.22 at noon on September 5, 2008. By 1.30 pm, the price went to $17.35. This is the highest gain in the company’s history since 2000.
Samsung Electronics Corporation, which is currently the second largest memory chip builder in the world, is considering various options to buy up SanDisk Corporation. This take over would help Samsung Electronics Corporation, keep up its top position over Japanese giant, Toshiba Corporation (TYO:6502).
The total size of the global chip market is $15 billion, but the recent price slump has forced small chip making companies to be consolidated by large companies for survival. As the price of chips has gone down by 50%, SanDisk Corporation incurred heavy losses in the second quarter of the ongoing fiscal year.
On the other had, Samsung Electronic Corporation had 42.3% market share in the NAND flash memory-chip market in the second quarter. Analysts are expecting a sales rise of 9% in 2008. Samsung pays $400 million to $500 million for using SanDisk Corporation’s flash memory patents. The acquisition will not only save the money but also enable Samsung to gain the royalties and licenses of SanDisk Corporation which is amounted to $254 million.
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