SanDisk Corporation (NASDAQ:SNDK) Investor Filed Lawsuit Against Acquisition By Western Digital

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Company Name(s): 
Case Name: 
SanDisk Deal Case 11/05/2015
Case Status: 
Lawsuit Filed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 

November 09, 2015 (Shareholders Foundation) - An investor who currently holds shares of SanDisk Corporation (NASDAQ:SNDK), filed a lawsuit in effort to halt the proposed takeover of SanDisk Corporation by Western Digital Corporation for $86.50 per share.

The plaintiff alleges that the defendants breached their fiduciary duties owed to NASDAQ:SNDK stockholders by agreeing to sell SanDisk Corporation too cheaply via an unfair process to Western Digital Corporation.

On October 21, 2015, Western Digital Corporation (NASDAQ: WDC) and SanDisk Corporation (NASDAQ:SNDK) announced that they have entered into an agreement under which Western Digital will acquire all of the outstanding shares of SanDisk for a combination of cash and stock. The offer values SanDisk common stock at $86.50 per share or a total equity value of approximately $19 billion.

However, the plaintiff claims that the proposed consideration NASDAQ:SNDK shareholders will receive is grossly inadequate and undervalues SanDisk Corporation. Indeed, at least one analyst has set the high target price for NASDAQ:SNDK shares at $90.00 per share and NASDAQ:SNDK shares traded in July 2014 as high as $106.76 per share. Furthermore, SanDisk Corporation reported that its annual Total Revenue rose from over $5.05 billion in 2012 to over $6.62 billion in 2014 and that its respective Net Income increased from $417.40 million to over $1 billion. Shares of SanDisk Corporation (NASDAQ:SNDK) reached as high as $106.76 per share in July 2014.

In addition, the plaintiff alleges that the process is also unfair to NASDAQ:SNDK stockholders. The plaintiff claims that certain defendants have acerbated their breaches of fiduciary by agreeing to preclusive deal protection devices, such as a no-shop provision that prevents bids from other companies, a matching rights provision, and a hefty termination fee provision.