Key Moments
- Western Digital will raise $3.17 billion by selling Sandisk shares in a discounted secondary offering.
- The company plans to exchange 5.8 million Sandisk shares for debt held by affiliates of J.P. Morgan and BofA Securities.
- After the transaction, Western Digital will still hold around $1 billion in Sandisk shares.
Debt-Reduction Strategy via Sandisk Stake Sale
Hard drive maker Western Digital plans to generate $3.17 billion by selling part of its stake in former unit Sandisk. According to a statement from Sandisk on Wednesday, the company will sell the shares at a 7.7% discount to Sandisk’s most recent closing price. This move will help Western Digital reduce debt while maintaining a significant stake in the company.
Structure of the Secondary Offering
Western Digital will exchange the 5.8 million Sandisk shares marked for sale with debt held by affiliates of J.P. Morgan and BofA Securities. Then, the two banks, acting as lead bookrunners, will sell the shares on behalf of their affiliated entities. This arrangement ensures a smooth transaction and orderly market execution.
| Transaction Detail | Information |
|---|---|
| Issuer of shares in offering | Sandisk |
| Seller | Western Digital |
| Offering size | $3.17 billion |
| Shares to be sold | 5.8 million |
| Discount to last close | 7.7% |
| Lead bookrunners | J.P. Morgan and BofA Securities |
Market Reaction and Remaining Stake
Sandisk shares fell roughly 2.13% in after-hours trading on Tuesday. Bloomberg News first reported the pricing range for the share offering.
After completing the sale, Western Digital will retain nearly $1 billion in Sandisk shares. The company intends to sell the remaining stake at a later date.
Company Response
Western Digital has not yet responded to a request for comment from Reuters regarding the transaction.
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