WD Cuts Sandisk Stake to Reduce Debt
- Western Digital plans to sell part of its remaining stake in Sandisk to raise $3.17 billion and reduce its debt load.
- The transaction involves a discounted secondary share sale that will significantly shrink the company’s holdings in its former flash‑memory unit.
- Both firms recently reported strong demand driven by AI‑related infrastructure growth.
Share Sale Aims to Strengthen Balance Sheet
Western Digital announced plans to raise $3.17 billion by selling a portion of its stake in Sandisk, the flash‑memory business it previously owned. The secondary offering, disclosed by Sandisk, prices the shares at a 7.7% discount to the company’s last closing price. As part of the deal, 5.8 million shares will be exchanged for debt held by affiliates of J.P. Morgan and BofA Securities. Following the sale, Western Digital’s remaining stake will fall to about 1.7 million shares, valued at nearly $1 billion based on Reuters calculations.
The company intends to sell the rest of its Sandisk holdings over time. Its goal is to reduce a debt burden that stood at $4.69 billion as of January 2026. Investors reacted quickly to the announcement, with Sandisk shares falling around 3% in premarket trading. Western Digital shares, meanwhile, rose nearly 2% as markets welcomed the debt‑reduction strategy.
Streamlining After Sandisk Spinoff
Western Digital completed the spinoff of Sandisk last year as part of a broader effort to refocus on its core hard‑disk drive business. The company has been restructuring operations to position itself as a pure‑play HDD provider. Recent financial results suggest that demand for its products is strengthening, driven in part by rapid growth in artificial intelligence technologies. Hyperscale data‑center operators are expanding infrastructure to support AI workloads, which has boosted orders for storage hardware.
Sandisk has also reported improving market conditions. Last month, the company forecast quarterly results above Wall Street expectations. Strong demand for data‑storage products contributed to the positive outlook. These trends highlight how both companies are benefiting from the surge in AI‑related computing needs.
Market Reaction and Future Outlook
The share sale marks another step in Western Digital’s ongoing financial restructuring. Reducing debt could give the company more flexibility as it navigates a competitive storage‑hardware market. Analysts note that the firm’s renewed focus on HDDs aligns with rising demand for high‑capacity storage in cloud and AI environments. Continued momentum in these sectors may help offset the challenges of separating from its former flash‑memory division.
Sandisk’s performance will remain closely watched as it adjusts to operating independently. Its recent guidance suggests confidence in the strength of the storage market. The company’s ability to meet rising demand for flash‑based products will be key to sustaining growth. Both firms appear positioned to benefit from long‑term trends in data‑center expansion and AI adoption.
The storage industry is undergoing significant shifts as AI workloads reshape hardware requirements. High‑capacity HDDs remain essential for cost‑efficient data storage, while flash memory continues to play a critical role in performance‑sensitive applications. Several major vendors have reported stronger‑than‑expected demand in recent quarters, suggesting a broader recovery in the sector. Western Digital’s decision to streamline its business reflects a wider trend of companies sharpening their focus to meet evolving infrastructure needs.
