Mergers & Acquisitions

Industry Perspective

Mergers & Acquisitions

by Ron Leach

At a time when world-wide attention is focused on the Lehman Brothers bankruptcy, the government bailout of insurance giant AIG, and the  sale of Merrill Lynch to Bank of America, it's fair to anticipate the possibility of some consolidation within the photo industry as well.

Samsung Electronics, for example, just made a move toward acquiring SanDisk Corporation, the world’s largest flash memory card maker in terms of revenue. The  flash memory market is suffering due to oversupply and the global economic slowdown, chip prices have fallen, and the profitability of most makers is under stress. According to industry analysts, the acquisition could significantly  reduce the amount of royalities Samsung  pays  to SanDisk and could give it more control over the flash memory market.

Some observers say that a Samsung acquisition of SanDisk at a reasonable price could benefit both firms.

According to the Wall St. Journal, SanDisk initially rejected the unsolicited $5.8 billion offer (while watching their shares jump 40% on the news), but the proposed deal isn’t exactly dead. One potential stumbling block is  whether a purchase of California-based SanDisk by South Korea’s Samsung might be challenged on antitrust grounds. Stay tuned.