SanDisk Completes Acquisition of Fusion-io 

SanDisk Corporation today announced it has completed the previously announced acquisition of Fusion-io, a leading developer of flash-based PCIe hardware and software solutions that enhance application performance in enterprise and hyperscale datacenters.

“I am delighted to welcome the employees of Fusion-io to SanDisk. The tremendous engineering and go-to-market talent of the Fusion-io team will accelerate our efforts to enable the flash-transformed data center,” said Sanjay Mehrotra, president and chief executive officer of SanDisk. “Together we will offer our customers the broadest set of enterprise flash solutions in the industry.”

Under the terms of the agreement, SanDisk completed the acquisition for $11.25 per share for the outstanding shares of Fusion-io, and assumed unvested, in-the-money equity awards, for a total aggregate value of approximately $1.1 billion, net of cash assumed.

SanDisk’s third quarter financial results will include the results of Fusion-io from July 23, 2014 through September 28, 2014. SanDisk expects to exclusively use non-captive memory for the Fusion-io business for at least the next several quarters.

SanDisk’s GAAP P&L results will be impacted by:

• Transaction, restructuring and integration costs, which are expected to be incurred over several quarters as integration takes place;
• Reduction of revenue related to support and maintenance services due to the effects of purchase accounting on Fusion-io’s deferred revenue;
• Inventory step-up charges related to recording Fusion-io inventory at fair value based on purchase accounting requirements;
• Charges for the amortization of acquisition-related intangible assets; and
• Stock compensation for the assumption and new issuance of employee equity incentives.

SanDisk’s non-GAAP P&L results will be impacted by cash-related charges for transaction, restructuring, and integration costs as well as the reduction of support and maintenance revenue due to the effects of purchase accounting. SanDisk expects the acquisition to be dilutive to non-GAAP earnings in the near term primarily due to charges for transaction, restructuring and integration costs, which are expected to be approximately $35 million in the third quarter of 2014 and approximately $15 million in the fourth quarter of 2014, as well as operating losses from Fusion-io partially offset by modest near-term synergies. The acquisition is expected to be accretive to non-GAAP earnings in the second half of 2015.

Details of Tender Offer and Acquisition Completion

The acquisition was effected through a tender offer followed by a merger. The tender offer for Fusion-io’s stock, which was made at $11.25 per share, net to the seller in cash, without interest thereon and less any applicable withholding taxes, expired at 12:00 midnight, New York City time, at the end of the day on July 22, 2014. As of the expiration of the tender offer, a total of 66,901,782 shares, representing approximately 61.02% of Fusion-io’s outstanding common stock, were validly tendered into and not validly withdrawn from the tender offer. In addition, notices of guaranteed delivery were delivered with respect to 6,879,953 shares, representing approximately 6.27% of Fusion-io’s outstanding common stock. All validly tendered shares have been accepted for payment, which will be made in accordance with the terms of the tender offer.

SanDisk and Fusion-io subsequently completed the acquisition by merging a subsidiary of SanDisk with and into Fusion-io, with Fusion-io continuing as the surviving corporation. In the merger, each share of Fusion-io’s common stock issued and outstanding immediately prior to the effective time of the merger, other than shares held by SanDisk, Fusion-io, and Fusion-io’s stockholders who properly perfect their statutory appraisal rights under Delaware law, was canceled and converted into the right to receive the $11.25 per share offer price in cash, without interest thereon and less any applicable withholding taxes.