WDC (NYSE: WDC) announced Wedensday that it will acquire SanDisk (NASDAQ: SNDK) for $86.50 per share, or an equity value of approximately $19 billion. The problem is the amount of debt taken on to enter another business that is volatile at best and declining at worst.

BMO Capital analyst, Keith Bachman, believes the transaction is expensive. Based on his SNDK estimates, the transaction represents a P/E of 29x the firm’s CY16 EPS estimate of $3.00. SNDK’s NTM P/E trading range has been about 13x over the last five years. WDC would need to cut deep into expenses in order to bring these two multiples to parity.

SNDK’s removable revenue has been declining at a 9% CAGR from CY11 to CY14, and accounts for approximately 40% of total revenues. Perhaps more importantly, the removable business has the highest gross margins of the business lines at more than 50%. The combination reduces WDC’s dependency on the PC business but it would increase its exposure to another commodity business – mobile phones, a market in which WDC has little to no experience.

The terms of the deal are unique in that the terms depend on the recently announced investment in WDC by Unisplendour for $3.8 billion. If the Unisplendour investment closes, then WDC will offer $85.10 in cash and 0.0176 shares of WDC per SNDK stock. If the Unisplendor investment does not close, then WDC will offer $67.50 in cash and 0.2387 shares of WDC per SNDK stock.

WDC will issue new debt of $17 billion for the transaction bringing the company’s total debt to $20 million. This is a large debt load to buy a company that is seeing declining revenue. It will also give the company a junk debt rating but the company believes it will regain its investment rating in 3-5 years.