Western Digital sells $3 billion worth of Sandisk shares, and Sandisk's stock price drops 2% after hours
A secondary public offering means that the stocks are not newly issued by the company, but rather sold by existing shareholders. According to the announcement, Western Digital will exchange its held debt for shares of Sandisk, allowing Western Digital to dispose of its claims against Sandisk through equity
Western Digital sells all its shares in SanDisk, with a transaction scale of $3.09 billion. This is the final step for the hard drive manufacturer to completely exit its former subsidiary after a year of separation.
On February 17, SanDisk announced that Western Digital plans to sell its common stock in SanDisk, and the company itself will not sell any shares or receive any proceeds from this issuance.
According to the statement, Western Digital expects to swap this batch of SanDisk shares with the debt of Western Digital held by affiliates of JP Morgan Securities and Bank of America Securities. After the transaction is completed, these affiliates will act as selling shareholders and sell shares in the secondary market through underwriters.
Previously, on January 29, during Western Digital's quarterly earnings call, the company's Chief Financial Officer Kris Sennesael stated that they plan to sell the remaining 7.5 million shares of SanDisk before the one-year anniversary of the separation on February 24. Following the announcement, SanDisk's stock price continued its downward trend from Tuesday, falling over 2% in after-hours trading.
Divergence in Stock Performance Post-Separation
Since the official completion of the separation on February 24 last year, the stock prices of the two companies have shown significant divergence. While Western Digital's stock price has risen sharply, SanDisk has experienced an even stronger upward trend.
The global shortage of flash memory has driven DRAM prices to continue rising since September of last year.
SanDisk is a major developer, manufacturer, and supplier of data storage devices and solutions based on NAND flash memory technology. The company's product portfolio includes solid-state drives, embedded products, memory cards, USB drives, as well as wafers and components, serving a wide range of customers from consumers to large enterprises and public clouds
