Western Digital Corporation (WDC, Financial) has successfully completed the spin-off of its wholly-owned subsidiary, Sandisk Corporation, marking a significant milestone in its strategic plan to separate its flash business from its hard disk drive operations. The spin-off was finalized on February 21, 2025, through a pro rata distribution of Sandisk's common stock to Western Digital's shareholders.
The separation was facilitated by a series of definitive agreements between Western Digital and Sandisk, which outline the terms and conditions of the spin-off. These agreements include the Separation and Distribution Agreement, Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement, Intellectual Property Cross-License Agreement, Transitional Trademark License Agreement, and Stockholder and Registration Rights Agreement. Each agreement is designed to ensure a smooth transition and define the ongoing relationship between the two companies post-separation.
As part of the spin-off, Sandisk has become an independent public company, with its common stock commencing trading on the Nasdaq Stock Market under the symbol "SNDK" on February 24, 2025. Western Digital continues to trade under the symbol "WDC" and retains a 19.9% ownership stake in Sandisk, although it will no longer consolidate Sandisk's financial results within its own.
In conjunction with the spin-off, Western Digital amended its existing loan agreement to accommodate the separation, including the release of guarantees and liens on collateral provided by Sandisk. The amendment also reduced the aggregate commitments under the revolving credit facility from $2.25 billion to $1.25 billion.
Prior to the spin-off, Sandisk paid a dividend of approximately $1.5 billion to Western Digital. The company plans to file pro forma financial information as an amendment to its current report on Form 8-K to reflect the financial impact of the spin-off.
This strategic move is expected to allow both Western Digital and Sandisk to focus on their respective core businesses, enhancing operational efficiency and shareholder value. For more detailed information on the spin-off and related agreements, visit GuruFocus.com.
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