Samsung Pursuing Acquisition Of SanDisk

September 5, 2008 4:13 p.m. EST

Milpitas, CA (AHN) - Shares of SanDisk jumped more than 30 percent on Friday after South Korea's Samsung Electronics told regulators it is pursuing a buyout of the memory and storage company.

SanDisk did not confirm nor deny the possibility of a takeover, preferring to keep such matter in house.

"SanDisk periodically has conversations with multiple parties, including Samsung, regarding a variety of potential business opportunities," SanDisk said in a statement, according to the Associated Press. "We evaluate all of these opportunities, but maintain a policy of not commenting on market rumors or speculation."

An acquisition would be beneficial for Samsung since they already pay SanDisk roughly $500 million a year in royalties related to flash-memory patents. SanDisk has a market capitalization of $3 billion, so a buyout would be profitable for Samsung in 6 years if you only considered what they pay out to the company, which is only a fraction of SanDisk's annual revenue.

Samsung most recently purchased TransChip Isreal Ltd., a privately held company. The company had not made an acquisition for nearly a decade before that.

Shares of SanDisk are currently up 31.3 percent to $17.68 in late afternoon trading.