SanDisk Micron Deal Reportedly A Possibility

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SanDisk is said to be gearing up for sale, which is news that appears to be pleasing to investors.

A report from Bloomberg Business came out on Tuesday afternoon indicating the company hired a bank to explore a potential sale with interest from both Micron Technology and Western Digital. The report cites "people with knowledge of the matter."

Naturally, none of the aforementioned companies would comment on what can only be considered rumor at this point.

The report's sources said no decision has been made, and noted that that the talks may not result in a transaction.

Barron's shares some insights from several analysts. For one, it quotes Needham & Co.’s Richard Kugele on several reasons both for and against a SanDisk sale:

From a high-level, we see at least three main arguments in favor of a WDC/SNDK deal, and three against. Arguments in favor of a SanDisk deal by WDC include: 1) Ally on the Board of SanDisk; 2) access to NAND supply, strong SSD brand presence; 3) large cash raise (assuming approval) could be used for M&A. Arguments against a SanDisk deal by WDC include:1) MOFCOM hasn’t approve the HGST integration yet, nor have regulators signed off on Unis/Tsinghua’s 15% investment in WDC (i.e. the cash isn’t in the bank yet); 2) Historical relationship with Intel on enterprise SSD controllers/MU on NAND (plus INTC’s investment in Tsinghua) complicate a SNDK tie-up; 3) Is NAND even the future of non-volatile memory, and will SNDK lead that charge or will significant investment be needed? Who owns what with the Toshiba relationship (would Toshiba sign off)? What does next year look like for SanDisk I’d Samsung doesn’t renew NAND license?

Sandisk shares skyrocketed on Tuesday night, and continued to rise on Wednesday.