Western Digital announces additional $4 billion in share buybacks, with management poised to unload its remaining stake in Sandisk
For Western Digital, patience is about to prove a virtue. Another 7.5 million shares of its old flash drive business — which became Wall Street’s hottest stock — will soon hit the market in a big boon for its balance sheet.
Management announced an additional $4 billion for its share buyback authorization this morning, and it’s not tough to tell why they’re feeling flush.
In the original spin-off of Sandisk on February 21, 2025, Western Digital distributed most of the shares of the flash drive business to its own shareholders, but kept just under 20% for itself, staying below that threshold for regulatory and accounting purposes.
“As you probably know, we still have 7.5 million Sandisk shares, and it’s our intention to monetize those shares before the one-year anniversary of the separation,” Chief Financial Officer Kris Sennesael said on the conference call following earnings last week. “Likely in a similar transaction that we have done before, meaning it’s a debt-for-equity swap, and so the proceeds will be used to further reduce the debt.”
That one-year anniversary is drawing near. And as if we needed another “tell” that this is imminent, JPMorgan moved Sandisk to “a not rated designation for policy reasons because of restriction” on Monday. JPMorgan was a co-lead bookrunner for the June 2025 offering that was used to culminate the first phase of this debt-for-equity swap.
WDC sold about 74% of the 28.8 million shares it retained in June of last year, generating about $880 million to retire debt in a tax-efficient manner. The company stands to be able to retire $5 billion in debt through the release of about one-third as many shares this time around!
(Would even more patience and a delay to this spin-off or the first debt-for-equity swap have been even better? Well, yes, but you can’t win ’em all.)
Sandisk has traded more than 18 million shares per day, on average, over the past month. Unless this offering provides an attractive excuse to sell (the same way President Donald Trump’s decision to nominate Kevin Warsh to lead the Fed kneecapped the precious metals rally), 7.5 million shares is something that the market would easily be able to absorb at anything close to the current level of enthusiasm.
They say if you love something, set it free. If it retires $5 billion in debt for you, it was meant to be.
