SanDisk Buys VC-backed Pliant Technology

SanDisk Corp. will pay about $327 million in cash to acquire-venture backed Pliant Technology Inc. Pliant, based in Milpitas, Calif., sells ultra-high performance enterprise solid state drives. The acquisition is set to close by the end of SanDisk’s second quarter. Pliant had raised money from investors including Arcturus Capital, Divergent Ventures Inc., Lightspeed Venture Partners and Menlo Ventures.


SanDisk Corporation (NASDAQ:SNDK), a global leader in flash memory storage solutions, today announced a definitive agreement to acquire Pliant Technology, Inc., a leading developer of enterprise solid state drives (SSD). Under the terms of the agreement, SanDisk will pay approximately $327 million in cash and provide certain equity-based incentives. The transaction, which has been approved by the boards of directors of both companies, is subject to customary closing conditions, including regulatory review and approval, and it is expected to close by the end of SanDisk’s second fiscal quarter.

Pliant currently sells ultra-high performance enterprise solid state drives based on the SAS protocol to meet the demanding performance, data integrity and reliability needs of enterprise storage customers. The company’s product roadmap also includes PCIe-based solutions for high-performance compute servers. Pliant is a leader in the use of multi-level cell (MLC) NAND in enterprise SSDs, and the lower cost of MLC is a key enabler for the broad adoption of SSDs in the enterprise market.

“Flash memory is making significant inroads into the enterprise by dramatically increasing application performance and reducing power consumption,” said Sanjay Mehrotra, SanDisk president and chief executive officer. “We believe that the combination of Pliant’s innovative technology and enterprise-level system expertise with SanDisk’s high-quality, large-scale MLC memory production is a winning value proposition for customers. Our advanced flash technology roadmap and flash management capability will complement Pliant’s strengths and allow us to lead the way in reliability and performance in the Enterprise SSD market.”

“The Enterprise SSD market is poised for considerable growth, with revenue projected to reach $4.2 billion in 2015, up from $994 million in 2010,” according to Joseph Unsworth, research director at Gartner. “This trajectory is fueled by the expanding use of MLC NAND technology, which will require extensive flash management expertise to ensure successful adoption in enterprise applications.”

SanDisk expects the transaction to be dilutive to its non-GAAP earnings by 2% to 3% in fiscal year 2011 and accretive to non-GAAP earnings in fiscal year 2012.

SanDisk Corporation (NASDAQ: SNDK) is a global leader in flash memory storage solutions, from research and development, product design and manufacturing to branding and distribution for OEM and retail channels. Since its founding in 1988, SanDisk has been innovating in flash memory and system technologies that have provided consumers with new and transformational digital experiences. SanDisk’s diverse product portfolio includes flash memory cards and embedded solutions used in smart phones, tablets, digital cameras, camcorders, digital media players and other consumer electronic devices, as well as USB flash drives and solid state drives for the computing market. SanDisk’s products are used by consumers and enterprise customers around the world. SanDisk is a Silicon Valley-based S&P 500 and Fortune 500 company, with more than half its sales outside the United States.

Pliant Technology’s Enterprise Flash Drives (EFDs) are a new class of solid-state storage devices that integrate seamlessly into enterprise information systems and dramatically improve performance, reliability, energy efficiency, and TCO. Pliant’s Lightning EFD family delivers breakthrough improvements over today’s highest performing hard drive and SSD storage solutions for a range of data I/O intensive enterprise applications. Pliant Technology has approximately 80 employees and is based in Milpitas, California.

This news release contains certain forward-looking statements, including the expected benefits of our pending acquisition of Pliant Technology, the growth of the enterprise SSD market, the increasing use of MLC technology in SSD, the expected costs of the transaction and its impact on our non-GAAP earnings in fiscal 2011 and fiscal 2012, that are based on our current expectations and are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate and may significantly harm our business, financial condition and results of operations. Risks that may cause these forward-looking statements to be inaccurate include among others:

we may not be able to effectively assimilate and integrate Pliant’s operations, personnel, technologies, products and information systems;
we may experience delays in the timing and successful integration of Pliant and, accordingly, we may not achieve the expected benefits from the acquisition;
we may not be able to maintain and grow customer relationships required to achieve our anticipated revenue and margins;
Pliant’s products may not perform as expected or could fail to meet customer qualification requirements;
through this acquisition, we are entering into the enterprise storage market, which is a new market for us, and we may not be successful in capturing the intended benefits of this acquisition;
the enterprise SSD market may neither grow as expected nor incorporate MLC technology as expected;
Pliant’s key personnel may decide not to work for us for a long period after the acquisition, or at all;
the integration of Pliant’s business, personnel and operations may disrupt our ongoing business, distract our management and employees, harm our reputation and increase our expenses;
we may incur one-time charges, increased contingent liabilities, adverse tax consequences, depreciation or deferred compensation charges, amortization of intangible assets or impairment of goodwill, which could harm our results of operations;
the Pliant acquisition may not be consummated due to the failure to satisfy the various conditions to closing, including the need for regulatory approval; and
the other risks detailed from time to time under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our Annual Report on Form 10-K for the fiscal year ended January 2, 2011.

SanDisk and the SanDisk logo are trademarks of SanDisk Corporation, registered in the United States and other countries. Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).