Coop's Corner

Time was when SanDisk, the world's biggest supplier of flash storage cards, was one of the hottest tech stocks this side of the Milky Way. Of course, those also were the days when companies like Lehman and Merrill Lynch were living large on Wall Street.

These days SanDisk is hardly the high-flying company it was a couple of years ago. Against a backdrop of weakening consumer demand and with flash memory prices falling, SanDisk's stock has reflected the company's changing fortunes, plummeting from a 52-week high of $55.98 to finish at $15.04 on Tuesday. It's not just SanDisk feeling the pinch; five of the seven top flash memory producers suffered declines or flat sales during the second quarter.

But after the close of trading Tuesday, Samsung Electronics confirmed earlier rumors and disclosed it had made a unsolicited $5.8 billion cash offer to buy SanDisk after what it said were four months of inconclusive talks. SanDisk was quick to rebuff the offer as inadequate.

In after-hours trading, shares of SanDisk soared to nearly $23 a share. In a statement, SanDisk rejected the $26 a share offer, arguing that it undervalues the company. That's pretty much standard operating procedure in any negotiation, though SanDisk also charged Samsung with "an opportunistic attempt" to exploit a depressed stock price, as well as "the uncertainty resulting from the unresolved patent cross license agreement renewal with Samsung, and general equity market conditions."

The rejection of the offer also served as an opportunity for SanDisk to air dirty laundry, suggesting that Samsung's offer might be "a calculated negotiating ploy or an attempt to gain leverage in the ongoing licensing negotiations between the companies, particularly in light of the fact that the parties have met over 10 times on this issue since June 2007."

SanDisk is not closing the door to future talks with Samsung. Irwin Federman, the company's lead independent director, said SanDisk remains willing to enter into "good-faith discussions" but did not get more specific.

But now that Samsung has put SanDisk in play, other well-capitalized would-be acquirers may begin sniffing around. Speculation centered on Toshiba, which operates a 300-millimeter wafer plant with SanDisk. What's more, the executive in charge of Toshiba's semiconductor business said the company may make a move in order to prevent a rival from controlling SanDisk. "We need to take preventive steps, if (SanDisk) looks like it'll be acquired," Corporate Senior Vice President Shozo Saito told reporters at the Industry Strategy and Technology Forum in Yokohama, Japan.

It's unclear whether he was sending out a message of real intent or simply playing to the microphones. While Saito said that Toshiba "was interested" he said there were no talks with SanDisk about a possible acquisition.