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By | Chris Mellor 16th March 2016 01:00

SanDisk stockholders book a table, prepare for Western Digital gobble

We're today's special on the menu, say investors

SanDisk shareholders have voted in favour of Western Digital buying their company.

At SanDisk's special stockholders' meeting today, 98 per cent of the votes were in favour of the sale to WDC.

WDC shareholders, via more than 90 per cent of the votes cast, have separately approved WDC issuing more shares (common stock) to help finance the acquisition.

It's also looking to raise around $10bn in loans, according to a report.

At the beginning of March, Institutional Shareholder Services (ISS), an independent proxy advisory firm, recommended the deal to both companies' shareholders, saying: "Support FOR the proposed merger is warranted given the strategic rationale – including complementary product lines, a doubling of the addressable market, and the ability to transition Western Digital beyond its core but declining HDD business – as well as synergies of $1.1 billion, expected earnings accretion within 12 months of closing, and the ability to adjust the cash component of the merger consideration if necessary to maintain financial flexibility."

ISS thinks that WDC–SanDisk could see full annual run-rate synergies of $500m within 18 months of the deal closing. These could rise to about $1.1bn by 2020.

The near-$19bn acquisition has received regulatory approvals in the USA, the EU, Singapore, Japan, Taiwan, South Korea, Turkey and South Africa, with China's MOFCOM yet to issue a decision.

The combination will add heft to WDC's flash-based operations, with it gaining NAND chip supplies and a foundry interest, ReRAM research and development, InfiniFlash all-flash JBOD-equivalent, enterprise and consumer SSDs, and embedded flash for mobile phones, tablets, digital cameras and so forth.

WDC will become the first vertically integrated company spanning flash chip production and disk drive production through to consumer and enterprise storage system products. It hopes this breadth and depth will be an engine to further growth, enabling it to grow beyond the disk market – which is condensing down towards capacity disk drives for data centers.

Increasingly, it is thought, flash drives will capture personal and business user IT end-point devices, mobile and fixed, that use disk.

There will need to be a large integration exercise, once the acquisition completes, with technology and product overlaps sorted out.

It's expected/hoped that the acquisition will close in the April-June period of this year. ®

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