It is going to be a messy buy-out and there are a few things that could go wrong. The value of the transaction hinges on the closing of a $3.78 billion investment in the company by Unisplendour which is a unit of Chinese government’s state-backed Tsinghua Holdings. Unisplendour has promised to buy 15 percent of Western Digital for $3.78 billion.
That is all well and good, but the US government is incredibly paranoid about the Chinese government getting its hands on all that US technology which is already made behind the bamboo curtain.
Western Digital Chief Executive Steve Milligan said in an interview that the Sandisk acquisition will ultimately dilute Unisplendor's stake and that the regulators will overlook the Chinese investment.
"There's always a risk and you're not done until you're done, but we were careful and consulted with US. government experts," he said.
Western Digitalneeds access to SanDisk's NAND technology to compete in the SSD market. Western Digital said it had the support of SanDisk partner Toshiba which had some rights that could block a deal.
SanDisk has an intellectual property sharing joint venture with the Japanese company and uses its foundries to make chips.