Western Digital Clears European Regulatory Hurdles To Finalize SanDisk Purchase
After looking into the matter, the European Commission has given Western Digital its blessing to complete the company's proposed acquisition of rival SanDisk. Regulators ultimately decided that the pairing of two U.S. storage giants would not adversely affect competition in Europe, in part because the overlap between the two manufacturers is effectively limited to flash memory storage products in the enterprise space.
"I am pleased that we have been able to ensure that this multi-billion dollar deal in a fast-developing industry can go ahead without delay. We have worked efficiently, in cooperation with our U.S. counterparts, to scrutinize this takeover in the strategically important IT sector and concluded that there would be no adverse effects on either retail or commercial customers," Margrethe Vestager, in charge of competition policy, said in a statement.
The European Commission did acknowledge that the proposed merger would result in a relatively high combined market share, but noted that the market is ripe with "strong and established" competition, including Intel, Toshiba, Micron, and Samsung, all of which are active in the same storage categories.
SanDisk had at least one other suitor, that being Micron, though ended up accepting WD's offer of approximately $19 billion. While that seems like a high sum, the merger gives WD vertical integration into NAND flash memory, which should help it withstand the market fluctuations in the price of memory chips.
"This transformational acquisition aligns with our long-term strategy to be an innovative leader in the storage industry by providing compelling, high-quality products with leading technology," said Steve Milligan, chief executive officer, Western Digital. "The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry. I'm excited to welcome the SanDisk team as we look to create additional value for all of our stakeholders, including our customers, shareholders and employees."
It's a long-term strategy for WD, which just recently announced $3.3 billion revenue for its second fiscal quarter ended January 1, 2016. That left WD with a profit of $374 million (non-GAAP) for the quarter, despite what the company described as a "challenging global economic environment" that saw "lower-than-expected" demand for hard drives.
"I am pleased that we have been able to ensure that this multi-billion dollar deal in a fast-developing industry can go ahead without delay. We have worked efficiently, in cooperation with our U.S. counterparts, to scrutinize this takeover in the strategically important IT sector and concluded that there would be no adverse effects on either retail or commercial customers," Margrethe Vestager, in charge of competition policy, said in a statement.
The European Commission did acknowledge that the proposed merger would result in a relatively high combined market share, but noted that the market is ripe with "strong and established" competition, including Intel, Toshiba, Micron, and Samsung, all of which are active in the same storage categories.
SanDisk had at least one other suitor, that being Micron, though ended up accepting WD's offer of approximately $19 billion. While that seems like a high sum, the merger gives WD vertical integration into NAND flash memory, which should help it withstand the market fluctuations in the price of memory chips.
"This transformational acquisition aligns with our long-term strategy to be an innovative leader in the storage industry by providing compelling, high-quality products with leading technology," said Steve Milligan, chief executive officer, Western Digital. "The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry. I'm excited to welcome the SanDisk team as we look to create additional value for all of our stakeholders, including our customers, shareholders and employees."
It's a long-term strategy for WD, which just recently announced $3.3 billion revenue for its second fiscal quarter ended January 1, 2016. That left WD with a profit of $374 million (non-GAAP) for the quarter, despite what the company described as a "challenging global economic environment" that saw "lower-than-expected" demand for hard drives.
