US flash memory card maker SanDisk Corp rejected a $5.9 billion bid by top memory chip maker, Samsung Electronics Co Ltd, but would not rule out a deal at a better price. Buying SanDisk would give Samsung advanced technology and a tighter grip on its market dominance as smaller rival Toshiba Corp is challenging its position and the industry battles steep memory price falls because of capacity overbuilding.
Samsung, which pays SanDisk over $350 million a year in royalties to use patented flash technology, is looking not only to slash those costs and but also gain control of SanDisk's many licences that control the industry. "With the offer, Samsung is eyeing an industry shake-up in the 4-5 year horizon. Samsung and SanDisk can work on technology and marketing together," said Park Hyun, an analyst at Prudential Investment & Securities.
SanDisk said in a statement that Samsung's $26-a-share cash offer - an 80 percent premium to its Monday close - undervalued the company, but it remained open to a deal with Samsung at a price that recognises its "intrinsic value".
SanDisk shares soared 53 percent to $23 in extended trading on Tuesday US time after Samsung went public with its bid following months of private talks that failed to produce a deal.
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