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SAN FRANCISCO -- Did one of



largest institutional shareholders give up on the company?

In a regulatory filing Monday, Capital Group International reported that its position in SanDisk now stands at 1.8%, vs. the 8.8% stake it owned in mid-October.

The timing of the change in Capital's position didn't appear to be completely coincidental, coming in the wake of the news that South Korea's


was rescinding its offer to acquire SanDisk, a maker of NAND flash memory chips, for $26 a share.

Shares of SanDisk fell 9%, or 90 cents, to $9.08 on Monday, as investors may have concluded that Capital, which ranked as SanDisk's No.2 institutional shareholder, has lost confidence that

a new acquisition offer

, or any other catalyst for the stock, is on the horizon.

Indeed, a retreat of Capital Group, which is sometimes cited as the world's largest investment management firm, would be an inauspicious development for SanDisk as it strives to win back investors spooked by the flash industry's ruinous supply glut and SanDisk management's resistance to the unsolicited acquisition bid. Shares of SanDisk are down 77% from their 52-week high of $39.92.

Yet it's not entirely clear whether Capital has actually dumped all its shares or simply shuffled them around.

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Analysts note that Capital Group's vast size and its network of funds mean that a filing stating that Capital Group International has reduced its stake doesn't necessarily mean that the parent company, The Capital Group Companies, has sold the shares. Capital Group may simply have broken up the SanDisk position and transferred the shares to its various funds.

A spokesperson for Capital Group did not return a call for comment.

SanDisk is among the various makers of flash memory that have been stung by the excess supply flooding the market and driving down prices for flash chips. Last month,


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, which have a joint venture producing flash memory chips, incurred hundreds of millions of dollars in charges relating to their flash business.

According to Capital Group International's filing on Monday, its stake in SanDisk fell below the 5% mark on Oct. 31, as the firm reduced its position from 19.8 million shares to roughly 4 million shares. Nearly 14 million shares of SanDisk traded hands on that day -- about 19% more than its three-month average daily volume -- yet SanDisk's stock price curiously finished the day up 76 cents.

One possibility is that Capital Group was selling the shares little by little in the days leading up to Oct. 31, lessening the negative impact of unwinding its position all at once on Oct. 31.

It's also possible that the shares were sold outside of the open market, in the so-called dark pools that match sellers and buyers without letting word of the transaction get out.

Whatever the case, SanDisk continues to provide the world of chip stocks with plenty of intrigue and drama.