Western Digital Corporation

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from prospectus requirements to allow company to spin off shares of its U.S. subsidiary to investors on a pro rata basis and by way of a dividend in specie -- distribution not covered by legislative exemptions -- company is a public company in the U.S. but is not a reporting issuer in Canada -- company has a de minimis presence in Canada -- following the spin-off, U.S. subsidiary will become an independent public company in the U.S. and will not be a reporting issuer in Canada -- no investment decision required from Canadian shareholders in order to receive shares of the subsidiary.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss.53 and 74.

IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(the Jurisdiction)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
WESTERN DIGITAL CORPORATION
(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the Legislation) for an exemption (the Exemption Sought) from the prospectus requirement in section 53 of the Securities Act (Ontario) in connection with the proposed distribution (the Spin-Off) by the Filer of the shares of common stock (Sandisk Shares) of Sandisk Corporation (Sandisk), a wholly-owned subsidiary of the Filer, by way of a dividend in specie to holders (Filer Shareholders) of shares of common stock of the Filer (Filer Shares) resident in Canada (Filer Canadian Shareholders).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) The Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the provinces and territories of Canada (other than Ontario).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation incorporated in Delaware with principal executive offices in San Jose, California, U.S.A. The Filer is is a developer, manufacturer, and provider of data storage solutions with a global presence in industrial, business to business, and consumer markets (the Filer Business).

2. The Filer is not a reporting issuer, and currently has no intention of becoming a reporting issuer, under the securities laws of any jurisdiction of Canada.

3. The authorized capital stock of the Filer consists of 750 million Filer Shares, U.S.$0.01 par value per share, and 5 million shares of preferred stock, U.S.$0.01 par value per share. As of November 29, 2024 there were 346,211,716 Filer Shares outstanding and, as of November 29, 2024, there were 235,000 shares of Series A Convertible Perpetual Preferred Stock outstanding.

4. The Filer Shares are listed on the Nasdaq Stock Market (Nasdaq) and trade under the symbol "WDC". Other than the foregoing listing on Nasdaq, no securities of the Filer are listed or posted for trading on any exchange or market in Canada or outside of Canada. The Filer has no present intention of listing its securities on any Canadian stock exchange.

5. The Filer is subject to the United States Securities Exchange Act of 1934, as amended from time to time (the 1934 Act) and the rules, regulations and orders promulgated thereunder.

6. Based on a geographic report of registered Filer Shareholders prepared for the Filer by Equiniti Trust Company LLC. (the Filer's transfer agent), as of November 29, 2024, there were no registered Filer Canadian Shareholders. The Filer does not expect this figure to have materially changed since the date mentioned above.

7. Based on a geographic analysis of beneficial shareholders prepared for the Filer by Broadridge Financial Solutions, Inc. (Broadridge), as of November 22, 2024 there were 5844 beneficial Filer Canadian Shareholders, representing approximately 1.0% of the beneficial Filer Shareholders worldwide (based on the number of worldwide beneficial Filer Shareholders as of September 23, 2024 as reported by Broadridge), and holding approximately 12,806,306 Filer Shares, representing approximately 3.7% of the outstanding Filer Shares (calculated on the basis of 346,211,716 Filer Shares issued and outstanding as of November 29, 2024). The Filer does not expect these numbers to have materially changed since the dates mentioned above.

8. Based on the information above, the number of registered and beneficial Filer Canadian Shareholders and the proportion of Filer Shares held by such shareholders are de minimis.

9. The Filer separated its flash-based product segment business (the Sandisk Business) from the rest of the Filer Business into its wholly-owned subsidiary, Sandisk, through a series of restructuring steps in October 2024.

10. Sandisk is a corporation incorporated in Delaware with principal executive offices in Milpitas, California, U.S.A. It holds directly and through its subsidiaries the Sandisk Business.

11. All of the issued and outstanding Sandisk Shares are held by the Filer and no other shares or classes of stock of Sandisk are issued and outstanding.

12. The Filer is proposing to Spin-Off pro rata to its shareholders, by way of a dividend in specie, 80.1% of the outstanding Sandisk Shares.

13. The distribution agent will distribute to each Filer Shareholder entitled to Sandisk Shares, in connection with the Spin-Off, the number of whole Sandisk Shares to which the Filer Shareholder is entitled in the form of a book-entry authorization. No fractional Sandisk Shares will be issued. Instead, the distribution agent will aggregate fractional shares into whole shares, sell such whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds (net of applicable taxes, costs and expenses, including brokers fees and commissions) pro rata to each Filer Shareholder who would otherwise have been entitled to receive fractional shares (net of any applicable withholding taxes). Interest will not be paid on the amounts of payment made in lieu of fractional Sandisk Shares.

14. Filer Shareholders will not be required to pay any consideration for the Sandisk Shares, to surrender or exchange Filer Shares, or take any other action to receive their Sandisk Shares. The Spin-Off will occur automatically and without any investment decision on the part of Filer Shareholders.

15. Subject to the satisfaction of certain conditions, it is currently anticipated that the Spin-Off will become effective on or about February 21, 2024. Following the Spin-Off, Sandisk will cease to be a subsidiary of the Filer.

16. Following the completion of the Spin-Off, the Sandisk Shares will be subject to the requirements of the 1934 Act and the rules and regulations of Nasdaq.

17. After the completion of the Spin-Off, the Filer Shares will continue to be listed and traded on Nasdaq. The Sandisk Shares have been approved for listing under the symbol "SNDK".

18. Sandisk is not a reporting issuer in any jurisdiction of Canada nor are its securities listed on any stock exchange in Canada. Sandisk has no present intention to become a reporting issuer in any jurisdiction of Canada or to list its securities on any stock exchange in Canada after the completion of the Spin-Off.

19. The Spin-Off will be effected under the laws of the State of Delaware.

20. Because the Spin-Off will be effected by way of a dividend of Sandisk Shares to Filer Shareholders, no shareholder approval of the Spin-Off is required (or being sought) under Delaware law.

21. On January 27, 2025, Sandisk filed a registration statement on Amendment No. 3 to Form 10 with the SEC detailing the proposed Spin-Off (the Registration Statement). On January 31, 2025, the SEC declared the Registration Statement effective. The Registration Statement can be accessed at https://www.sec.gov/Archives/edgar/data/2023554/000119312525013282/d835366d1012ba.htm.

22. The Filer Shareholders will receive a notice of internet availability of an information statement (the Information Statement) detailing the terms and conditions of the Spin-Off and forming part of the Registration Statement. All materials relating to the Spin-Off sent by or on behalf of the Filer to Filer Shareholders resident in the United States (including the Information Statement) will be sent concurrently to Filer Canadian Shareholders.

23. The Information Statement will contain "prospectus-level" disclosure about Sandisk within the meaning of Canadian securities legislation and market practices (it being understood that such "prospectus-level" disclosure will be prepared in accordance with the form requirements of the SEC).

24. Filer Canadian Shareholders who receive Sandisk Shares pursuant to the Spin-Off will have the benefit of the same rights and remedies in respect of the disclosure documentation received in connection with the Spin-Off that are available to Filer Shareholders resident in the United States.

25. Following the completion of the Spin-Off, Sandisk will send concurrently to holders of Sandisk Shares resident in Canada the same disclosure materials required to be sent under applicable United States securities laws to holders of Sandisk Shares resident in the United States.

26. The Spin-Off to Filer Canadian Shareholders would be exempt from the prospectus requirement pursuant to section 2.31(2) of National Instrument 45-106 Prospectus Exemptions but for the fact that Sandisk is not a reporting issuer under the securities legislation of any jurisdiction in Canada.

27. There will be no active trading market for the Sandisk Shares in Canada following the Spin-Off, and none is expected to develop. Consequently, it is expected that any resale of Sandisk Shares distributed in connection with the Spin-Off will occur through the facilities of Nasdaq or any other exchange or market outside of Canada on which Sandisk Shares may be quoted or listed at the time that the trade occurs or to a person or company outside of Canada.

28. Neither the Filer nor Sandisk is in default of any securities legislation in any jurisdiction of Canada.

Decision

29. The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

30. The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that the first trade in the Sandisk Shares acquired pursuant to the Spin-Off will be deemed to be a distribution subject to section 2.6 of National Instrument 45-102 Resale of Securities.

Dated in Toronto this 7th day of February, 2025.

"Leslie Milroy"
Manager, Corporate Finance Division

OSC File #: 2025/0017