AMD acquires ATI

Chip maker buys graphics card vendor for $5.4bn

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.