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Toshiba Cuts Billion Dollar SanDisk Deal

Toshiba Cuts Billion Dollar SanDisk Deal

Toshiba and Samsung two of the biggest players in the NAND memory market are set to go head to head over arch rival SanDisk with the Japanese Company overnight buying $1 billion worth of equipment from joint venture partner SanDisk who are currently facing a takeover bid from South Korean rival Samsung.

Accoring to Reuters SanDisk shares have halved in value this year in the face of a worldwide glut in chips, and some analysts said the deal with Toshiba could reverse some of the losses, helping it fend off Samsung Electronics. SanDisk, the biggest U.S. maker of flash memory cards, holds key patents in such memory, but a rating downgrade by Standard & Poor’s in July is raising financing costs, and the sliding market is expected to cause it to announce a sharp drop in quarterly earnings on Monday.

Under the deal Toshiba will take on about $550 million of SanDisk’s $1 billion lease obligation and pay roughly $400 million to $500 million in cash reuters reports.
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“From SanDisk’s point of view, this is a new cash inflow to keep it going. It could extend Samsung’s battle for SanDisk for some time,” said Park Hyun, an analyst at Prudential Securities.