8-KLeadership ChangesAcquisitions & DispositionsMaterial Agreements+4

WESTERN DIGITAL CORP 8-K Report, Material Agreement (May 12, 2016)

Filed May 12, 2016For Securities:WDC

Summary

Western Digital Corporation (WDC) has officially announced the completion of its acquisition of SanDisk Corporation, as of May 12, 2016. This strategic move integrates SanDisk as a wholly-owned indirect subsidiary of Western Digital, significantly expanding its presence and capabilities in the data storage market. The transaction was structured as a merger where SanDisk's shareholders received $67.50 in cash and 0.2387 shares of Western Digital common stock for each share of SanDisk common stock. This acquisition was financed through a combination of existing cash, senior secured credit facilities totaling approximately $9.875 billion (including term loans and a revolving credit facility), and an additional $3 billion bridge loan facility, as well as proceeds from a prior offering of senior unsecured and secured notes. The company also detailed significant financial arrangements made in conjunction with the acquisition, including entering into supplemental indentures for SanDisk's outstanding convertible notes, thereby assuming liability for these notes. Furthermore, Western Digital amended its senior unsecured and secured notes indentures to include SanDisk Technologies, Inc. as a guarantor. The filing also notes the repayment and termination of Western Digital's existing credit agreement. A key leadership change includes the appointment of Mr. Sanjay Mehrotra, former CEO of SanDisk, to Western Digital's Board of Directors.

Key Highlights

  • 1Western Digital (WDC) has successfully completed the acquisition of SanDisk Corporation on May 12, 2016.
  • 2SanDisk is now a wholly-owned indirect subsidiary of Western Digital.
  • 3SanDisk shareholders received $67.50 in cash and 0.2387 shares of WDC common stock per share.
  • 4The acquisition was financed by a substantial debt package, including senior secured credit facilities and a bridge loan, totaling over $12.8 billion.
  • 5WDC assumed SanDisk's outstanding convertible notes, with amended terms for conversion and repurchase rights.
  • 6SanDisk's former CEO, Sanjay Mehrotra, has been appointed to Western Digital's Board of Directors.
  • 7WDC's existing credit agreement was repaid and terminated as part of the transaction financing.

Frequently Asked Questions

This 8-K filing is highly significant as it formally announces the completion of Western Digital's (WDC) acquisition of SanDisk. This marks a major strategic expansion for WDC, integrating SanDisk's flash memory and storage solutions business, which is expected to enhance WDC's competitive position and product portfolio in the data storage industry. Investors should pay close attention to the financial implications, including the assumption of debt and SanDisk's convertible notes, and the integration strategy moving forward.

SanDisk shareholders received $67.50 in cash and 0.2387 shares of Western Digital (WDC) common stock for each share of SanDisk common stock they held, excluding treasury shares, shares with appraisal rights, and shares held by WDC or its subsidiaries. Fractional shares of WDC common stock were to be settled in cash.

The acquisition was financed through a combination of sources. This included cash on hand, proceeds from a large debt financing package comprising senior secured credit facilities (Term Loan A, Term Loan B, and a revolving credit facility) totaling approximately $9.875 billion, and a 45-day senior secured bridge loan of $3 billion. Proceeds from Western Digital's previously issued senior secured notes ($1.875 billion) and senior unsecured notes ($3.35 billion) also contributed.

Western Digital, through its subsidiary Western Digital Technologies, Inc., assumed liability for SanDisk's outstanding convertible notes. Supplemental indentures were entered into to reflect WDC's assumption of payment obligations and conversion responsibilities. These notes now convert into a combination of Western Digital Common Stock and cash, and holders have certain repurchase rights following the 'Designated Event' (the Merger).

Yes, effective as of the closing date, Mr. Sanjay Mehrotra, the former Chief Executive Officer of SanDisk, was appointed as a member of Western Digital's Board of Directors. He will receive standard compensation for a non-employee director.