Tuesday, 25 July 2006

AMD to Buy ATI Technologies for USD 5.4 bln

Advanced Micro Devices Inc. has announced that it would buy graphics chipmaker ATI Technologies Inc. for USD 5.4 billion, in an aggressive move to beat its competitor Intel Corp.

The merger will allow AMD to offer integrated processor and graphics products for mobile computing, gaming and media markets.

The company said that the first computer system, which will feature the technologies of both the companies will be launched in 2007.

Under the terms of the transaction, AMD will acquire all of the outstanding common shares of ATI for a combination of USD 4.2 billion in cash and 57 million shares of AMD common stock, based on the number of shares of ATI common stock outstanding on July 21, 2006.

All outstanding options and RSUs of ATI will be assumed. Based upon the closing price of AMD common stock on July 21, 2006 of USD 18.26 a share, the consideration for each outstanding share of ATI common stock would be USD 20.47, comprised of USD 16.40 of cash and 0.2229 shares of AMD common stock.

AMD expects to finance the cash portion of the transaction with a combination of cash and new debt.

AMD expects that the transaction will be slightly added to earnings in 2007, and meaningfully added in 2008, before the inclusion of ATI acquisition–related charges.

AMD said it expects that it will reduce operating expenses by about USD 75 million for the combined company by the end of 2007.

The combined company would have achieved about USD 7.3 billion in total consolidated sales during the last four quarters with a workforce of about 15,000 employees, the companies said.