Samsung Isn't Done with SanDisk

SAN FRANCISCO -- Samsung called off its $5.85 billion offer to acquire chipmaker SanDisk(SNDK Quote) on Wednesday.

But the move looks less like Samsung walking away from a deal as it does the beginning of a hard-fought -- and public -- negotiation process.

"My thought is that Samsung is playing hardball," says Robert Katz, a portfolio manager at Senvest International, one of the top 20 institutional owners of SanDisk shares.

The timing of Samsung's announcement is no coincidence. On Monday, SanDisk reported another large quarterly loss and said it would shore up its balance sheet by selling 30% of its chip manufacturing capacity to Toshiba, pushing SanDisk's stock down nearly 12%.

Samsung's announcement Wednesday that it was rescinding its offer to buy SanDisk for $26 a share sent SanDisk shares down a further 32% to $9.93 in midday trading -- its lowest level since 2003.

"If you read the Samsung letter, they don't say they're no longer interested in the [SanDisk] technology, they're just not interested at $26," says Katz.

"I think by definition, if Samsung comes back to the table, they're probably going to come back lower," he says.

While Katz's firm believed the initial offer undervalued SanDisk, he wouldn't comment on the firm's opinion about any potential new deal.

SanDisk is one of the top sellers of flash memory chips, a type of technology used to store music, video and photos in consumer electronic gadgets like cell phones and MP3 players.