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Tuesday, September 16, 2008

Samsung proposes $26 cash for Sandisk

-- s

Combination Would Deliver Substantial Immediate and Long-Term
Value to Shareholders of Both Companies

Combined Business Would Have Superior Global Brand, Unparalleled
Technology Platform and Scale, and Resources to Drive Convergence
SEOUL, Korea--(Business Wire)--
Samsung Electronics (005930:KS) ("Samsung") today announced that
it has sent a letter to the Board of Directors of SanDisk (NASDAQ:
SNDK) ("SanDisk") reiterating its proposal to acquire SanDisk for $26
per share in cash.

The full text of the letter follows:

September 17, 2008

Board of Directors
SanDisk Corporation
601 McCarthy Boulevard
Milpitas, CA 95035
Attention: Dr. Eli Harari, Chairman and Chief Executive
Mr. Irwin Federman, Vice Chairman and Lead
Independent Director

Dear Eli and Irwin:

We are in receipt of your letter dated September 15, 2008 and are
deeply disappointed that after four months of discussions and meetings
- in Seoul and San Francisco - about a possible business combination,
SanDisk Corporation ("SanDisk") continues to cling to unrealistic
expectations on both its standalone market value and an appropriate
merger price. Under our proposal, which we are reiterating here, we
remain prepared to acquire all of the outstanding shares of SanDisk
for $26 per share in cash. As you know, our proposal is not subject to
any financing contingency and the entire purchase price will be funded
with our cash on hand and available financing.

This offer is full and fair and we believe that, given an
opportunity, your shareholders would agree. It constitutes a very
substantial premium to SanDisk's share price and would deliver to your
shareholders an immediate cash premium of 93% over SanDisk's closing
share price on September 4, 2008, the day before news reports
indicated that we were in discussions about a business combination.
Furthermore, it is a premium of 80% over your closing share price on
September 15, 2008, and a 66% and 164% premium to your 30-day weighted
average price and enterprise value as of September 4, 2008,

Despite the significant premium we propose to SanDisk's current
stock price, your letter states that our proposed price does not
"reflect the intrinsic value of SanDisk's business" and references the
52-week high. The world has changed dramatically in the past 52 weeks
as can be seen from SanDisk's own disappointing results. Consumer
spending and the overall economic situation have been getting worse.
It will take the NAND flash market quite a bit of time to recover.
Notwithstanding the current market conditions, to stay competitive,
SanDisk will need to fund critical investment and development over the
next several months - cost cutting alone will not suffice. Our offer
insulates your shareholders from the risk of market conditions that
have severely deteriorated and are expected to remain challenging. As
highlighted above, we strongly believe that there is significant
execution risk of achieving any stand-alone plan.

While it has been and remains our strong preference to continue to
work with you to reach a binding merger agreement in a cooperative and
expeditious fashion, we have become increasingly concerned that the
lack of progress is not serving the interests of either company's
shareholders. For this reason, and the fact that speculation has grown
since the early September news reports, we feel compelled to clarify
our intentions publicly.

Compelling Business Logic

Our many meetings and conversations over the last several months
have served to confirm for us that a combined Samsung-SanDisk would
have a superior global brand, an unparalleled technology platform and
the scale and resources to drive convergence in the marketplace. With
SanDisk's innovative culture and technology leadership and Samsung's
scale, leadership in manufacturing and execution, and strong systems
and consumer electronics segment knowledge, the combined company would
be well positioned to accelerate the adoption of flash memory
technology in new markets. We can also establish the platforms and
capabilities necessary to position flash as the preferred vehicle for
delivery and storage of a wide variety of content, such as film, in a
way that would not be possible for either of our companies alone.

As we have seen in recent months, markets have become more
turbulent and global economic trends are negative. At the same time
the competitive environment remains challenging. To survive and
compete in these times we will each need to leverage our resources and
rely upon a strong balance sheet to fund critical investment and
development through good times and bad. Separately investing in
necessary state of the art facilities will be a significant tax on
your business in the near term. In addition, reliance on IP and
enforcing it is a costly and uncertain business for both our
companies. Faced with these challenges, now is the time to merge.

SanDisk's Management and Employees

SanDisk is widely recognized for the quality of its people and its
culture of innovation. For our part, that is a key reason we are
attracted to your company and a significant portion of the transaction
value to us is represented by the talented management and employees
that we hope would continue to work for the company going forward. Our
intention is to operate SanDisk as a separate subsidiary company
inside of Samsung and to maintain the environment that has contributed
to your success. We have a long term commitment to the space,
financial stability and a strong desire to grow the SanDisk platform,
thereby creating significant new opportunities for SanDisk employees.
We do not plan to cut jobs - rather, we want to work with you to find
the best way to structure incentives to retain and motivate your key
talent following the transaction.

Process and Deal Certainty

At our July 22 meeting in San Francisco you proposed a process in
which Samsung would forego customary due diligence, not only until all
transaction terms including price are finalized and documented, but
also until we had completed negotiation and execution of a replacement
IP licensing agreement and a new supply agreement, neither of which
would ever come into effect if an acquisition transaction were
finalized. You have also requested as a condition to moving forward
that we provide you with some form of assurances as to regulatory

Although there had been a lack of progress over 14 months of IP
discussions, we dedicated significant time and energy to follow the
path you outlined in order to reach an agreement. Unfortunately, the
process you outlined in July has resulted in no meaningful progress
toward a transaction in the intervening eight weeks. Despite our
substantial efforts on the IP front, you have agreed to schedule only
two meetings since July and during those meetings you have been
unwilling to engage with us on any productive proposals that
adequately recognize the changed market dynamics in your markets and
the decline in value of your patent portfolio in the period since the
IP license was last renewed.

As to the regulatory process, we have repeatedly expressed our
confidence that this transaction will receive all necessary
governmental approvals and we remain willing to immediately engage
your experts to discuss the regulatory process. You have yet to even
identify to us who is acting as your counsel on these issues. Having
dedicated significant time and resources in evaluating this
combination with our external counsel, we do not foresee any issues
that could not be resolved. We again extend the invitation for your
advisory team to engage with our counsel, subject to customary
protective provisions, to share our respective views on this topic.

Confirmatory Due Diligence

Although we have completed extensive preliminary due diligence
based on publicly available information, our proposal is of course
subject to confirmatory due diligence and the negotiation of a
definitive merger agreement. Key due diligence topics that underlie
the value in our offer include your relationship with Toshiba,
forecasted operating plans, R&D projects, technology roadmaps, key
employees and pending litigation.

Again, it continues to be our strong preference to work together
with the SanDisk Board to reach a mutually agreeable transaction. We
have drafted and are prepared to send to you a due diligence request
list and a draft merger agreement. We again urge you to engage with us
promptly in a productive discussion about our proposal.


Yoon-Woo Lee
Vice Chairman and Chief Executive Officer
Samsung Electronics Co., Ltd.

Financial and Legal Advisors

Samsung has engaged J.P.Morgan Chase & Co. and Allen & Company LLC
as its financial advisors, and Sullivan & Cromwell LLP as its legal
advisor in connection with the proposed transaction.

About Samsung Electronics

Samsung Electronics Co., Ltd. is a global leader in semiconductor,
telecommunication, digital media and digital convergence technologies
with 2007 consolidated sales of US$103.4 billion. Employing
approximately 150,000 people in 134 offices in 62 countries, Samsung
consists of four main business units: Digital Media Business, LCD
Business, Semiconductor Business and Telecommunication. Recognized as
one of the fastest growing global brands, Samsung is a leading
producer of digital TVs, memory chips, mobile phones and TFT-LCDs. For
more information, please visit

Forward Looking Statements

This press release contains forward-looking statements, including
those related to Samsung's proposal to acquire SanDisk, which are
subject to various risks and uncertainties, which could cause actual
events or actual results to differ materially from those expressed or
implied in the forward-looking statements contained in this press
release. Among other factors, the proposed transaction described in
this press release could be affected by whether the proposed
transaction receives the support of SanDisk and can be completed
timely and successfully as well as changes in the economic and
business environment. Many of the factors that will determine the
outcome of the subject matter of this press release are beyond
Samsung's ability to control or predict. All information in this press
release is as of September 17, 2008 and Samsung disclaims any
obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.

Sard Verbinnen & Co
Jim Barron or Kathryn Kranhold
New York - +1-212-687-8080
Elizabeth Hanahan or Lucy Neugart
San Francisco - +1-415-618-8750

Copyright Business Wire 2008

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