If I got a $5.8 billion acquisition offer, I’d take it. But some people think that’s small beans. Samsung Electronics said today it was going public with a hostile bid for SanDisk after four months of talks failed to result in an agreement.

Samsung said in a letter that it has offered $26 a share in cash for SanDisk. That’s a 96 percent premium over the price of SanDisk shares on Sept. 4, a day before news of the talks broke. Samsung said that SanDisk’s response indicated it was clinging to unrealistic expectations of its market value. SanDisk said the offer undervalues the value of its flash memory chip business, which has been in a tough state due to over-production. Eli Harari, chief executive of SanDisk, said that Samsung was opportunistically trying to take advantage of an industry-wide downturn.

Samsung and SanDisk both make NAND flash memory chips, which are used to store data in portable electronics because they can retain data without electrical currents. Digital cameras use flash, as do other devices where removing the memory is a useful feature.

Heavy use of storage in cell phones for storing camera phone pictures and video has led to skyrocketing demand. But over-capacity has led to a collapse in NAND chip pricing SanDisk’s stock price has fallen 76 percent in the past year. SanDisk shares rose 53 percent to $23 a share in after-hours trading.

Jim Handy, a longtime flash market analyst at Objective Analysis in Los Gatos, Calif., said that SanDisk has every reason to expect that its stock price will rebound beyond its 52-week high of $55.98 a share.  He said he expects the industry to rebound and stock prices as well — but supply and demand in the industry may not bounce back until the middle of 2009. Meanwhile, SanDisk is in the middle of negotiations with Samsung over patent licenses under which Samsung is paying SanDisk hundreds of millions each year.

“We see this as a very shrewd move by Samsung to take advantage of a confluence of favorable circumstances,” Handy said.

In 2007, the combination of Samsung and SanDisk accounted for about 50 percent of the NAND market. Hence, the combination might run into antitrust troubles. Handy said he doubts the merger will succeed.

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