Sandisk rejects Samsung takeover bid

Flash storage card manufacturer SanDisk has rejected an unsolicited takeover bid from hardware maker Samsung Electronics, saying the offer undervalues the company.

The two companies had been in takeover talks for about four months, but Samsung went public with its offer on Tuesday, apparently after discussions had broken down.

"Our offer insulates your shareholders from the risk of market conditions that have severely deteriorated and are expected to remain challenging," said Samsung vice chairman and CEO Yoon-Woo Lee in a letter to SanDisk executives.

SanDisk chairman and CEO Eli Harari said in a statement his company is willing to discuss a takeover, but that the $26 per share offer "is opportunistically timed at the trough of an industry-wide downturn" and undervalues the flash card maker.

Samsung argues that a combination of the companies would create a powerful global brand and allow the resulting company to position Flash as the preferred technology for delivery and storage of content.

While Samsung said that SanDisk is a technology leader and has an innovative culture, it also argued that independently investing in the necessary facilities required to further technology innovation would be a significant tax on SanDisk's business.

Should the deal go through, Samsung would continue to operate SanDisk as a separate subsidiary and would not plan to lay off workers, it said.