Western Digital cuts offer price for SanDisk

HONG KONG (Reuters) - Hard-disk maker Western Digital Corp said a unit of China's Unisplendour Corp had terminated a deal to take a 15 per cent stake in the company, prompting the US company to cut its offer for rival SanDisk Corp.

Unisplendour and its Unis Union unit backed out after a decision by the Committee on Foreign Investment in the United States (CFIUS) to investigate the deal, Western Digital said.

Unisplendour had agreed in September to buy the stake for US$3.78 billion.

CFIUS, an inter-agency panel led by the Treasury Department, assesses potential mergers to ensure they do not endanger national security. The agency's objections have created roadblocks for some Chinese deals.

Fairchild Semiconductor rejected an offer from China Resources Microelectronics Ltd and Hua Capital Management Co this month, citing concerns about US approvals.

Philips' plan to sell an 80 per cent stake in its California-based Lumileds division to a consortium that included Chinese firms was blocked by CFIUS last month.

Western Digital affirmed its commitment to buy SanDisk Corp on Tuesday, a day after shareholder Alken Asset Management asked the company to drop the deal, citing a high purchase price.

Western Digital, which agreed to buy SanDisk in a US$19 billion deal in October, had said then it would revise the offer if the Unisplendour investment fell through.

Based on Western Digital's Monday close, the company said it would now pay US$78.50 per share in cash and stock for SanDisk, compared with its previous offer of US$86.50. The latest offer values SanDisk at US$15.78 billion.

Western Digital said it has received regulatory approvals for the SanDisk deal from the United States and European Union among others.