Lexar Bid is Inadequate
On Friday, blink media manufacturer Lexar Media (LEXR) got a greater modified requisition proposal from Micron Technology (MU). The modified quote puts the all-stock exchange deal at around $10 a share, up partially from the preliminary proposal.
Significant investors consisting of billionaire financier Carl Icahn along with hedge funds and also profile supervisors have actually considered the preliminary proposal to be unacceptable. Elliott Associates thinks the preliminary quote “considerably underestimates Lexar,” as well as really feels Lexar deserves in between $1.5 billion as well as $2.4 billion. The price quote is well over the changed requisition proposal of concerning $827 million.
I should consent as well as state the modified requisition proposal is means as well reduced as well as requires to be turned down by investors. Micron intends to pay around 1.10 x sales for Lexar while the marketplace leader SanDisk (SNDK) is trading at 4.35 x sales. Lexar likewise has a $400 million license violation legal action versus Toshiba that it had actually formerly won yet is currently based on an allure by Toshiba.
Consider it in this manner, an effective $400 million negotiation for Lexar would certainly correspond to around $4.83 per share in extra money to include in the existing $0.54 in cost-free cash money after financial obligation that Lexar has. This implies Micron would certainly pay much less than $5 a share for Lexar’s possessions, which is reduced.
There is additionally supposition that SanDisk is seriously considering taking a go for obtaining Lexar. This would certainly make good sense because SanDisk would certainly strengthen its management setting.
SanDisk has a close working partnership with Toshiba, which can see SanDisk decrease or decrease the negotiation if it handled to obtain Lexar.
An unique investor conference to evaluate the requisition quote has actually been relocated to June 16. In my sight, the $10 quote underestimates Lexar.
Elliott Associates thinks the preliminary proposal “considerably underestimates Lexar,” and also really feels Lexar is worth in between $1.5 billion as well as $2.4 billion. Micron desires to pay around 1.10 x sales for Lexar while the market leader SanDisk (SNDK) is trading at 4.35 x sales. In my sight, the $10 quote underestimates Lexar.