Institutional Shareholder Services Recommends Western Digital and SanDisk Shareholders Vote for Merger

Western Digital Corporation announced that Institutional Shareholder Services, Inc. (ISS), an independent proxy advisory firm, has issued a report recommending that Western Digital shareholders vote to approve the issuance of Western Digital stock in the proposed acquisition of SanDisk Corporation and all other proposals described in Western Digital’s proxy statement/prospectus relating to the company’s special meeting of shareholders to be held on March 15, 2016.

“We are pleased that ISS has recommended voting in favor of this compelling combination,” said Steve Milligan, CEO, Western Digital. “The Western Digital board of directors believes that the acquisition of SanDisk is the best strategic option for the company and the path that creates the most long-term value for shareholders. This combination is the next step in our ongoing strategy to transform Western Digital into a leading storage solutions company with global scale, extensive product and technology assets, and deep expertise in non-volatile memory.”

In its statement to clients, ISS said: “Support for the proposed merger is warranted given the strategic rationale-including complementary product lines, a doubling of the addressable market, and the ability to transition Western Digital beyond its core but declining HDD business-as well as synergies of $1.1 billion, expected earnings accretion within 12 months of closing, and the ability to adjust the cash component of the merger consideration if necessary to maintain financial flexibility.”

SanDisk has a strong global team and technology capability that will complement the Western Digital portfolio well. As previously disclosed, the combined company is expected to achieve full annual run-rate synergies of $500 million within 18 months post-closing, and these synergies are expected to increase to approximately $1.1 billion by 2020.

Acquiring SanDisk is the logical next step in Western Digital’s long-term strategy to achieve leadership in storage and memory, driven by product diversification and vertical integration. The transformational acquisition was the result of a multi-year strategic review. It represents the capstone in Western Digital’s strategy to become a media-agnostic, vertically integrated storage solutions provider. With SanDisk, the company will have a more extensive product portfolio, double its addressable market, be a larger supplier of SSDs – the fastest growing market segment – and have access to captive NAND supply through SanDisk’s partnership with Toshiba.

Western Digital believes this transaction maximizes value for both Western Digital and SanDisk shareholders. The transaction is expected to be EPS accretive on a non-GAAP basis in calendar year 2017, and the combined company’s ability to generate significant cash flow will allow it to reduce debt quickly, while maintaining its strong dividend policy. Western Digital also has an experienced management team with demonstrated expertise in driving significant value creation, particularly with regard to integration of acquired companies.

Western Digital’s board of directors recommends that Western Digital shareholders vote for the proposal to issue Western Digital common stock to acquire SanDisk, which is necessary to complete the transaction.

Western Digital’s special meeting of shareholders is scheduled to take place on March 15, 2016.