Street applauds SanDisk/Fusion-io's price, synergies

"[SanDisk] was already positioning the company as more of a enterprise storage company ... what the Fusion-io (FIO +22.4%) deal does is it enhances that significantly," says Cross Research's Steven Fox, praising SanDisk's (SNDK +3.6%) $1.1B buy.

Summit Research likes the fact SanDisk is picking up a blue-chip client list that includes Apple and Facebook, though those two companies have been paring orders lately. Other clients of Fusion-io's PCIe server flash modules include Pandora, Salesforce, Alibaba, and Baidu.

SanDisk is paying only 2.5x FY15E (ends June '15) sales exc. cash. Needham likes the valuation, and notes the deal makes SanDisk the #2 enterprise SSD vendor (16%+ share), behind Intel. Gartner recently estimated SanDisk and Fusion-io were #4 and #5, behind Intel, Samsung, and Western Digital.

Even before the deal, SanDisk was aiming for $1B in 2016 enterprise sales. Adding Fusion-io allows SanDisk to pair its ability to source high-end NAND flash chips at cost with FIO's high-performance/low-latency server flash IP.

SanDisk made fresh highs today. FIO closed 1% above SanDisk's $11.25/share offer price on hopes for a higher bid. Seagate recently bought Avago/LSI's PCIe server flash unit for $450M.

Comments (3)
  • King Rat
    , contributor
    Comments (1463) | Send Message
    Congrats to FIO shareholders.
    It is morbidly curious that nearly every single m&a announcement is followed by at least one law firm investigating a lawsuit against the firm accepting the offer.


    I hope SanDisk can make good use of this move without resorting to layoffs.
    16 Jun 2014, 05:44 PM Reply Like
  • rdumont99
    , contributor
    Comments (62) | Send Message
    Congrats to *new* FIO shareholders, you mean. Those of us who bought in a couple years ago are taking a bath - and now our losses will be locked in.


    As to the lawsuits, the company had enough cash to keep operating for some time and many people thought it was worth a lot more than what Sandisk is paying and were waiting for the turnaround. Somebody knows something we didn't, or else Sandisk is making like a thief on this one. Or, perhaps prospects weren't near as rosy as many of us believed and this is a lucky break before we lose more... I have no crystal ball to tell me unfortunately, but I welcome the lawsuit(s) shining a light in the dark corners of this one.
    16 Jun 2014, 10:47 PM Reply Like
  • bizwhiz
    , contributor
    Comments (21) | Send Message
    I am an old bag-holder on this one, but feel ok about the BO. I think there is a slight chance Apple will bid, but if so, probably not much more than 12 dollars per share anyway. And if they don't bid, I think this will close quickly and that is something of a relief as well.
    17 Jun 2014, 04:47 AM Reply Like
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