Bloomberg: Earlier this month, Samsung Electronics said the co. was considering to buy flash memory maker SanDisk (SNDK). Late Tuesday, in a proposed deal that could reshape a struggling industry, Samsung announced a $5.85 billion, or $26 per share hostile bid for SanDisk (SNDK). SanDisk’s shares shot up 52% to $22.85 in after-hours trading after ending the regular session up $0.63 at $15.04. In a letter send to SanDisk’s board dated Sep.15, Samsung’s CEO Yoon-Woo Lee reiterated a previous offer to buy the company for $26 per share in cash. Lee said that after four months of negotiations, SanDisk “continues to cling to unrealistic expectations on both its standalone market value and an appropriate merger price.” But, SanDisk’s board unanimously rejected the offer in its own statement late Tuesday, arguing that Samsung’s acquisition offer does not provide appropriate value to its stockholders and that it undervalues the co.’s long-term prospects. An acquisition would be positive for Samsung, which pays $300 million to $400 million in royalty payments annually to SanDisk. If a purchase agreement is reached, it would be the largest in the South Korean chipmaker’s history and help Samsung widen its lead over Toshiba in the $15 billion market for flash-memory chips. Many analysts think that an acquisition could shift the balance of power in the flash memory industry. [Bloomberg]
Barclays: Barclays Plc, the U.K.’s third- biggest bank and a major global financial services provider, announced Tuesday an agreement to acquire Lehman Brothers North American investment banking and capital markets businesses. The London-based bank will acquire Lehman’s trading assets with a current estimated value of $72 billion and trading liabilities with a current estimated value of $68 billion for $250 million in cash. Robert E Diamond Jr, Barclays President, said: “This is a once in a lifetime opportunity for Barclays.” Barclays has also agreed to acquire Lehman Brothers New York Head Office at 745 Seventh Avenue and two data centres in New Jersey for close to their current market value, estimated at $1.5 billion. The combined consideration totals some $1.75 billion. The Acquisition will combine two strong client franchises and product offerings and allow Barclays to have a top 3 position in the US capital markets, the largest in the world. The 158-year old firm Lehman is selling off pieces of itself that weren’t included when the investment bank filed for Chapter 11. [Barclays]
The Federal Reserve: The Fed decided on Tuesday to keep the benchmark rate at 2% and the discount rate at 2.25%, citing risks to growth and inflation. Some analysts predicted The Federal Reserve would cut its target overnight borrowing rate by a half percentage point to 1.50%. Merrill Lynch economists David Rosenberg and Drew Matus in a note Monday said: “In the current environment, the Fed may feel the need to get in front of the situation with a more aggressive move instead of the standard quarter-point reduction.” The Fed instead kept rates unchanged. The FOMC’s directive was very similar to the wording from August 5, although downside risks to economic growth received additional attention. Fed also said that slowing export growth and inflation risks remain a significant concern to the Central Bank.