8-KMaterial AgreementsExhibits & Filings

WESTERN DIGITAL CORP 8-K Report, Material Agreement (Oct 26, 2015)

Filed October 26, 2015For Securities:WDC

Summary

Western Digital Corporation (WDC) has filed an 8-K report detailing a significant definitive agreement to acquire SanDisk Corporation. This strategic move involves merging SanDisk into WDC, with SanDisk surviving as a wholly-owned subsidiary. The acquisition price will be paid through a combination of cash and WDC common stock, with the exact mix dependent on the completion of a separate, previously announced transaction involving a Chinese investor, Unisplendour Corporation Limited. This secondary transaction, involving the sale of WDC shares to Unis Investor, is subject to regulatory approvals, including CFIUS clearance. The structure of the deal offers two potential consideration scenarios for SanDisk shareholders based on whether the Unis transaction closes first. The financing for the acquisition will be substantial, involving approximately $18.1 billion in new debt facilities, intended to fund the purchase price, refinance existing debt of both companies, and cover transaction expenses. This filing marks a crucial step in the integration process, outlining the terms, conditions, and potential risks associated with combining these two significant players in the data storage industry.

Key Highlights

  • 1Western Digital Corporation (WDC) entered into a Merger Agreement to acquire SanDisk Corporation on October 21, 2015.
  • 2The acquisition will be structured as a merger where SanDisk becomes a wholly-owned subsidiary of WDC.
  • 3SanDisk shareholders will receive a mix of cash and WDC common stock, with the proportion varying based on the closing of WDC's separate transaction with Unisplendour Corporation Limited.
  • 4The total consideration is subject to potential reallocation between cash and stock based on SanDisk's available cash at closing (Closing Cash Shortfall).
  • 5WDC plans to finance the acquisition through a combination of cash, new debt financing totaling approximately $18.1 billion, and WDC common stock.
  • 6The merger is subject to customary closing conditions, including stockholder approvals from both companies, regulatory clearances (including antitrust and CFIUS), and the absence of material adverse effects.
  • 7Termination fees are outlined, with potential payments ranging up to $1.06 billion in specific circumstances, particularly related to antitrust approvals.

Frequently Asked Questions

The filing does not explicitly state a total dollar value for the acquisition upfront, as the consideration per share is a mix of cash and Western Digital stock, and the proportion varies. However, the financing structure indicates a significant transaction, with WDC planning to raise approximately $18.1 billion in new debt facilities, which will be used to fund part of the purchase price, refinance debt, and cover transaction expenses.

SanDisk shareholders will receive a combination of cash and Western Digital Corporation common stock. The exact amount of cash and stock per SanDisk share depends on whether Western Digital's transaction with Unisplendour Corporation Limited has closed prior to the merger. If the Unis transaction has closed, shareholders will receive $85.10 in cash and 0.0176 shares of WDC stock per SanDisk share. If it has not closed, they will receive $67.50 in cash and 0.2387 shares of WDC stock per SanDisk share. This consideration is subject to potential adjustments.

Key conditions include the approval of the merger agreement by the stockholders of both SanDisk and Western Digital (under certain circumstances), the expiration or termination of waiting periods under antitrust laws (including Hart-Scott-Rodino, EU, and China), receipt of necessary regulatory clearances (including CFIUS approval if applicable), absence of any orders or laws prohibiting the merger, accuracy of representations and warranties, and the absence of any material adverse effect on either company.

The filing outlines several risks, including the possibility that stockholders of either company may not approve the merger, adverse reactions to business relationships, uncertainties regarding the timing of the merger, failure to satisfy closing conditions, governmental prohibitions or delays in approvals, negative impacts on WDC's stock price, competitive responses, difficulties in integrating SanDisk's business, failure to achieve expected cost savings and synergies, unexpected costs and liabilities, litigation, and the inability to retain key personnel.