Samsung retracts bid for flash memory maker SanDisk

Today the CEO of Samsung Electronics, Yoon Woo Lee, sent a letter to the board of directors of flash memory maker SanDisk stating that Samsung was no longer interested in purchasing SanDisk. Samsung had offered the company US$26 per share of SanDisk, which is a premium of over $11 from SanDisk's closing trading price from yesterday, but now says that there is too much risk in SanDisk for that offer to stand.

SanDisk recently announced a loss of roughly $250 million and indicated plans to lay off some of its employees.

The main body of the letter to SanDisk is available below:

After nearly six months of efforts to pursue a transaction with no meaningful progress, we are withdrawing our proposal to acquire SanDisk. I am disappointed that we have been unable to reach an agreement on our proposal. I continue to believe that a combination of our two companies would have created a superior global brand, an unparalleled technology platform and the scale and resources to drive convergence in the marketplace. Had we been able to execute on our proposal, your shareholders would have received full, fair and certain value for their shares and your employees and other stakeholders would have benefited from a broader platform and a wider range of opportunities.

Nevertheless, we have obligations to our own shareholders which require that we take a disciplined approach, particularly with respect to significant initiatives such as this. That disciplined approach requires that we squarely face the growing uncertainties in your business, which may continue to deteriorate in this difficult economic environment and further impact your standalone value. Your recently announced third quarter results serve only to illustrate this risk. Your surprise announcements of a quarter billion dollar operating loss, a hurried renegotiation of your relationship with Toshiba and major job losses across your organization all point to a considerable increase in your risk profile and a material deterioration in value, both on a stand-alone basis as well as to Samsung. As a result of these developments, we are no longer interested in acquiring SanDisk at $26/share.

While I regret that we were unable to work together to achieve a business combination that would have created new opportunities for all of us, we wish you the best in meeting the challenges ahead.