Western Digital Sells 5.8M Sandisk Shares at 7.7% Discount for $3.17B Debt Swap
Western Digital is selling 5.8 million Sandisk shares at a 7.7% discount to raise $3.17 billion by swapping the shares for debt held by affiliates of J.P. Morgan and BofA. The move leaves Western Digital with about a $1 billion Sandisk stake and sent Sandisk shares down 2.13%.
1. Secondary Share Sale
Western Digital is selling 5.8 million Sandisk shares through a secondary offering priced at a 7.7% discount to the last close. The shares will be swapped to satisfy debt obligations held by affiliates of J.P. Morgan and Bank of America, which also serve as lead bookrunners.
2. Remaining Stake and Debt Reduction
Post-sale, Western Digital will retain approximately $1 billion worth of Sandisk shares, which it intends to divest over time. The $3.17 billion proceeds will be applied toward cutting the company’s outstanding debt.
3. Market Reaction
Sandisk shares declined 2.13% in after-hours trading following the offering announcement, reflecting investor concern over the discounted sale. Trading volume spiked as market participants adjusted positions ahead of the sale execution.
4. Strategic Rationale
The debt-for-equity swap allows Western Digital to shore up its balance sheet without a cash outlay. By gradually disposing of its remaining stake, the company aims to streamline its portfolio and focus on core storage businesses.