SanDisk could be worth $34 to $36 a share if Samsung Electronics were to sweeten its offer to reflect the value of royalties it pays to the U.S. flash memory maker, according to people with direct knowledge of the matter.
South Korea-based Samsung, the world’s top maker of memory chips, made public an offer to buy SanDisk for $5.85 billion, or $26 a share, on Sept. 16, after SanDisk rebuffed the offer in private.
Samsung makes memory chips based on NAND flash technology, while SanDisk is best known for its flash memory cards that use such chips. Flash is a type of compact data storage used in consumer gadgets like as digital cameras and MP3 players.
SanDisk said that Samsung’s offer undervalued the company, but the board made clear in a letter to Samsung’s chief executive, Lee Yoon Woo, that it was open to talks about a higher offer that would reflect the “intrinsic value” of the company.
SanDisk has not yet said what such an offer might be, but two sources, who requested anonymity because the matter was sensitive and they were not authorized to speak on the record, said a per-share offer somewhere near $35 was likely to be a more agreeable price to get the ball rolling on negotiations.
The sources declined to say whether executives and advisers from the two parties had met since the offer was made public.
Samsung said its offer, which represented an 80 percent premium to SanDisk’s closing price on Sept. 15, was “full and fair.”
A Samsung official who was not authorized to speak on the record questioned whether SanDisk would be able to pull up its stock price and generate shareholder value as a stand-alone company, given the volatile market conditions. SanDisk shares fell 11 percent on Friday to $18.38.
Analysts have speculated that SanDisk may be…