Is Sandisk Really Going to be Acquired?

On the morning of August 29, Sandisk SNDK spiked up from $36.80 to $37.50. Some traders speculated that this sudden price movement was a result of takeover rumors. Benzinga heard chatter that Intel INTC may have hired Goldman Sachs GS for advisory purposes to acquire Sandisk.

While it is still classified as a rumor, Benzinga reached out to Betsy Van Hees of Wedbush Securities in order to learn more about the possibilities of a Sandisk takeover. Van Hees currently maintains a 'neutral' rating because she does not believe that "Sandisk will be able to outperform comparable companies in the selected universe, which includes companies like Micron Technologies [NASDAQ: MU]. We do, however, maintain a 12-month price target of $45."

According to Van Hees, "Intel would not purchase Sandisk for several reasons. First, Intel is currently in a joint venture with Micron Technologies, so purchasing Sandisk would not be unnecessary. Second, Intel is not looking to expand into the commodity flash memory market. Intel also already has its own line of solid state drives."

While Intel may not be considering Sandisk, what would happen if Sandisk is taken over by another company? Regardless of whom it may be, Sandisk shareholders would most likely have hefty demands and terms for the acquirer. After all, Sandisk has been public for almost 16 years.

Van Hees claims that "if anyone were considering purchasing Sandisk, it would be Toshiba, even though that seems improbable itself. Currently, Sandisk and Toshiba are working together on flash memory for mobile devices. If anything, Toshiba may consider buying Sandisk to have full control of that operation."

While investors may have gotten excited after hearing rumors of an acquisition, some may be disappointed to learn that it appears to be unlikely. Not to say that it would never happen, but Sandisk has been able to hold its own for a while and grow organically in treacherous markets. Investors may be better suited looking at smaller tech companies which would make more probable acquisition targets.