Western Digital $WDC ( ▲ 7.41% ) just boosted its share repurchase program by another $4 billion, and the timing is no coincidence. Management is preparing to unload its remaining stake in Sandisk $SNDK ( ▲ 4.55% ) , a move that could meaningfully strengthen its balance sheet.
Patience, in this case, looks like it is about to pay off.
The Last Pieces of the Spin-Off
When Western Digital spun off Sandisk $SNDK in February 2025, it distributed most shares to its own investors but held onto just under 20%. That leftover stake has since shrunk, and only about 7.5 million Sandisk shares remain on Western Digital’s books.
CFO Kris Sennesael made it clear the plan is to monetize those shares before the one-year anniversary of the separation. The likely route is another debt-for-equity swap, with proceeds used to pay down debt rather than fund operations. Western Digital already used a similar structure last year, selling about 74% of its retained stake and generating roughly $880 million to reduce leverage.
This next round could be even more impactful, with estimates suggesting the company could retire up to $5 billion in debt through the transaction.
A Subtle Signal From Wall Street
There are signs the move is getting closer. JPMorgan recently shifted its rating on Sandisk $SNDK to “not rated for policy reasons,” a step often taken when a firm is involved in a pending transaction. JPMorgan also helped lead a prior offering tied to Western Digital’s earlier debt-for-equity swap.
Sandisk has been trading more than 18 million shares per day on average over the past month. That kind of volume suggests the market could likely absorb a 7.5 million share sale without too much disruption, assuming investor enthusiasm for the stock holds up.
Buybacks Backed by Balance Sheet Moves
The new $4 billion buyback authorization from Western Digital $WDC adds another layer to the strategy. By pairing debt reduction from the Sandisk sale with aggressive share repurchases, management is effectively reshaping the company’s capital structure on two fronts.
Let the spin-off go, clean up the balance sheet, and reward shareholders along the way. If it works, this could be one of the cleaner post-separation playbooks in recent memory.