Western Digital Sells SanDisk Stake for $3.1B

Western Digital Corp. is actively working to divest its remaining stake in SanDisk Corp., a move expected to generate $3.09 billion. This significant sale occurs almost a full year after SanDisk separated its flash memory unit. The shares are being offered within a price range of $535 to $555, representing a discount of up to 9.4% from SanDisk's closing share price on Tuesday.

The offering has reportedly been oversubscribed, indicating strong investor interest following a confidential marketing period. This strategic sale by Western Digital is happening against the backdrop of a worldwide flash memory shortage. The surge in demand is largely attributed to the booming artificial intelligence sector.

SanDisk's products are essential components in computers and mobile phones. Despite the cyclical nature of the tech industry, demand for these products has remained robust. Analysts predict that elevated stock prices for SanDisk and its industry peers will persist at least through 2026, bolstered by soaring DRAM chip prices since September.

Western Digital had previously committed to selling its entire remaining 7.51 million SanDisk shares before the one-year anniversary of the separation, which officially concluded on February 24th of the previous year. The divestment is structured to allow Western Digital to exchange the SanDisk shares for debt held by affiliates of JPMorgan Chase & Co. and Bank of America Corp., who are leading the offering.

As of Tuesday's after-market trading, SanDisk shares saw a slight decrease of 1% to $584, while Western Digital shares remained nearly unchanged at $284.01.