The Korean Acquisition That Wasn't

There will be no SamDisk or Sansung. Korean technology giant Samsung has officially dropped its plans to acquire American gadget maker SanDisk (Nasdaq: SNDK  ) .

This wasn't a shock by any means. The market took Samsung's $5.85 billion offer semi-seriously for a while, giving SanDisk's stock a short-lived boost last September, but SanDisk's management team called the bid "inadequate" and "opportunistically timed." I thought Samsung would respond with a higher bid, because SanDisk has a serious footprint in major retail channels like Wal-Mart Stores (NYSE: WMT  ) and Best Buy (NYSE: BBY  ) -- and Samsung was paying hefty licensing fees for some memory technologies SanDisk had under patent protection.

But then the Crash of 2008 happened. American retail didn't look so tempting anymore, and Samsung's higher bid never happened. Investors lost hope early, dropping SanDisk far below the S&P 500 benchmark. SanDisk's stock price has fallen around 25% from its buyout speculation highs last year despite a very impressive bounce from lows approaching $5. Meanwhile, my finest research source (Capital IQ, a division of Standard & Poor’s) shows that Samsung Electronics did all right without this acquisition, and that stock rose by about 50% on the Korea Exchange.

Sometimes I wish I could invest in Samsung. I mean, yeah, there's a handful of Samsung tickers floating about the Pink Sheets and anybody could buy those today. But it is nearly impossible to get decent information about this foreign stock, and there are absolutely no guarantees that the Pink Sheet tickers reflect Samsung's true value. Capital IQ is great, but even that high-priced professional resource can't be fully trusted when it comes to foreign stocks in companies that don't want to deal with SarbOx regulations. No Samsung stock for me, then -- no matter how much I admire the company itself.

So, we prudent tech investors are stuck with stocks we can actually do research on, like Apple (Nasdaq: AAPL  ) for the daring and Sirius XM Satellite Radio (NYSE: SIRI  ) for the true daredevils. And SanDisk is officially stuck being SanDisk, now trading at a 33% discount to the old offer that was rejected for being too cheap.

Maybe a merger of near-equals between SanDisk and American memory rival Micron (NYSE: MU  ) would make more sense than a big-name buyout from abroad. Either way, the whole memory sector is trying to consolidate, and I fully expect SanDisk to join that trend within the next year or so. SanDisk's CAPS page is brimming with further analysis and takeover speculation, and CAPS is ready to hear your thoughts on the subject.

Apple and Best Buy are Motley Fool Stock Advisor recommendations. Best Buy and Wal-Mart Stores are Motley Fool Inside Value picks. The Fool owns shares of Best Buy. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.


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  • Report this Comment On September 04, 2009, at 2:31 PM, trammen0 wrote:

    Way to add SIRI to a story that has nothing to do with it..... Extremely FOOLISH!!!!

  • Report this Comment On September 04, 2009, at 4:19 PM, RAF22 wrote:

    True daredevlis are making a ton of money going against all the negative advice you have doled out on these pages with regard to SIRI. The stock has been strengthening consistently over the last few months and TMF has had this bass ackwards the entire time!

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