AMD to Acquire ATI

By DE Editors

AMD, Advanced Micro Devices Inc., (Austin, TX) and ATI Technologies(Markham, ONT) have announced plans for AMD to buy ATI in a transactionvalued at approximately $5.4 billion. A joint press release says thecombination will create a processing powerhouse by bringing AMD'stechnology leadership in microprocessors together with ATI's strengthsin graphics, chipsets, and consumer electronics.

AMD Chairman and CEO Hector Ruiz says the acquisition should drivegrowth, innovation, and choice for its customers, particularly in thecommercial and mobile computing segments and in the rapidly-growingconsumer electronics market. "ATI shares our passion and complementsour strengths: technology leadership and customer centric innovation,"Ruiz said. "Bringing these two great companies together will allow usto transcend what we have accomplished as individual businesses andreinvent our industry."

According to The New York Times, the combination of the twocompanies "will reshape the semiconductor industry." The announcementcomes as the semiconductor industry is sparking interest amonginvestors. The New York Times says that later this week,Philips Electronics plans to field final bids worth more than $10billion apiece for its semiconductor division from three consortiums ofprivate equity investors.

According to AMD, the ATI acquisition means the company will be able todeliver innovations that fulfill the increasing demand for moreintegrated solutions while also continuing to develop discrete productsthat empower customers to choose the combination of technologies thatbest serves their needs. Beginning in 2008, AMD says it aims to movebeyond current technological configurations to transform processingtechnologies, with silicon-specific platforms that integratemicroprocessors and graphics processors to address the growing need forgeneral-purpose, media-centric, data-centric, and graphic-centricperformance.

Under the terms of the transaction, AMD will acquire all of theoutstanding common shares of ATI for a combination of $4.2 billion incash and 57 million shares of AMD common stock. All outstanding optionsand RSUs of ATI will be assumed. AMD anticipates it will finance thecash portion of the transaction with a combination of cash and newdebt, having obtained a $2.5 billion term loan commitment from MorganStanley Senior Funding, Inc. In the event that the transaction does notclose, ATI has agreed to pay AMD a termination fee of $162.0 millionunder circumstances specified in the acquisition agreement. Thetransaction is expected to be completed by the end of this year. Formore information, visit amd.com.

Sources: Information gleaned from the company's website and collected from other sources.