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AMD has finally confirmed its acquisition of ATI after weeks of channel speculation.
The chip maker, agreed to acquire all of the outstanding common shares of ATI
for a combination of $4.2bn in cash and 57 million shares of AMD common stock,
based on the number of shares of ATI common stock outstanding on 21 July, 2006.
The total comes to $5.4bn.
AMD said the deal was 'unanimously approved' by the board of directors of each company, but it is still subject to ATI shareholder approval.
AMD chief executive, Hector Ruiz, said the deal would "reinvent our industry,
" as he appeared in New York with ATI chief executive Dave Orton, last night.
AMD said it had obtained a $2.5bn term loan commitment from Morgan Stanley
Senior Funding, Inc. to help it finance the deal, which has captured the
imagination of industry-watchers everywhere.
Hector said: "Bringing these two great companies together will allow us to
transcend what we have accomplished as individual businesses and reinvent our
industry as the technology leader and partner of choice.
“We believe AMD and ATI will drive growth and innovation for the entire
industry, enabling our partners to create differentiated solutions and
empowering our customers to choose what is best for them."
Orton claimed all of the companies' product lines would benefit. "Joining
with AMD will enable us to innovate aggressively on the PC platform and continue
to invest significantly in our consumer business to stay in front of our
markets," he said.
Orton will join AMD as an executive vice president of the ATI business division,
reporting to the AMD office of the chief executive, comprising Ruiz and
president and chief operating officer Dirk Meyer.
However there is speculation that hundreds of employees will lose their jobs
as the new giant seeks to cut operating expenses by around $75m by the end of
2007.
The combination of AMD's processor expertise with ATI's 'strengths' in graphics,
chipsets and consumer electronics, would result in a "new and more formidable
company," the pair have claimed.
The combined company would have achieved approximately $7.3bn in total
consolidated sales during the last four quarters with a workforce of
approximately 15,000 employees, according to the joint statement today.
ATI will pay AMD a termination fee of $162m should the deal yet founder. The
transaction is expected to be completed in the fourth quarter of 2006.
Further reading:
AMD
glum as sales rise
AMD
boosted by fast yields
Memory
makers sued for alleged price fixing
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