Samsung drops offer for Sandisk

A deal would have boosted Samsung's market dominance

Samsung Electronics has withdrawn from a $26-a-share (£16) offer to buy US flash memory card maker Sandisk.

But Samsung, which pulled out after six months of what it called "no meaningful progress", hinted it might still be interested in a lower purchase price.

California-based Sandisk rejected the $5.9bn bid last month, saying on Wednesday it had told Samsung how it thought further talks could be held.

Sandisk shares fell 6.1% to 10.4 euros ($13.72; £8.21) in Frankfurt trade.

They had earlier closed at $14.76 in the US on Tuesday evening.

Samsung dropped its offer after citing the US firm's worsening losses and uncertain outlook.

The purchase would have strengthened Samsung's market dominance over smaller rival Toshiba.

"Your surprise announcements of a quarter-billion-dollar operating loss, a hurried renegotiation of your relationship with Toshiba and major job losses across your organisation all point to a considerable increase in your risk profile and a material deterioration in value, both on a stand-alone basis as well as to Samsung," Samsung boss Lee Yoon-woo wrote to Sandisk.

In July, Samsung had warned of a sluggish memory chip market and low margins for mobile phones and flat screen televisions.

Three months on, the downturn in the memory chip industry shows no signs of easing.

"Samsung probably has decided that as the memory chip market continues to weaken, the kind of price Sandisk was asking wasn't what they were willing to go along with," said Kim Young-june, an analyst at KTB Investment.