Finance & Business World

SanDisk Corp. said Tuesday it had rejected a $5.85 billion takeover offer from Samsung Electronics Co. Ltd after its board determined the deal was "inadequate in multiple respects."

SanDisk (SNDK)’s shares shot up $7.81, or 52%, to $22.85 in after-hours trading after ending the regular session up 63 cents at $15.04.

Samsung, in turn, said it had reiterated its $26-per-share cash offer for Milpitas-based SanDisk.

In letter to SanDisk’s board dated Sept. 15, Samsung Chief Executive Officer Yoon-Woo Lee said that after four months of negotiations, SanDisk "continues to cling to unrealistic expectations on both its standalone market value and an appropriate merger price."

But SanDisk shot back, saying the price offered by Samsung undervalues the maker of flash storage and memory cards used in digital cameras, cell phones and other electronics.

SanDisk said Samsung had indicated that "it might be willing to pay a significant premium" to SanDisk’s closing price of $28.75 per share on May 22, 2008, which it said was the date Samsung first approached SanDisk about a possible deal.

Samsung’s offer "is an opportunistic attempt to take advantage of SanDisk’s current stock price," the SanDisk statement said.

South Korea-based Samsung, however, noted that its $26-per-share offer represents a 93% premium over SanDisk’s closing share price of $13.46 on Sept free credit report instantly. 4, the day before media reports of a possible deal surfaced.

Samsung makes NAND flash memory used in digital devices such as cameras and music players, as well as DRAM, or dynamic random access memory, chips used in personal computers.

In his letter, Lee said a merger with Samsung would help insulate SanDisk from deteriorating market conditions in the flash memory market, which faces oversupply and deep pricing pressure, as well as weakening consumer spending. 

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