NEW YORK – Microchip manufacturer AMD will buy Markham, Ont.-based ATI for US$5.4 billion, the companies announced this morning.
"The combination will create a processing powerhouse by bringing AMD’s technology leadership in microprocessors together with ATI’s strengths in graphics, chipsets and consumer electronics," says the press release.
While AMD generally concentrates on microprocessors and computing, ATI’s chips are used in many consumer electronics devices from cable set top boxes to video game consoles.
"Combining technologies, people, and complementary strengths, AMD plans to deliver in 2007 customer-centric platforms for the benefit of customers who want to collaborate in the development of differentiated solutions," adds the release.
The combined company would have approximately US$7.3 billion in total consolidated sales during the last four quarters with a workforce of approximately 15,000 employees, if they were already together. Headquartered in Sunnyvale, California, the company will maintain sales, design and manufacturing centers worldwide and major business centers in Silicon Valley, Austin, Texas and Markham, Ontario. ATI President and CEO Dave Orton will serve as an executive vice president of the ATI business division, reporting to the AMD Office of the CEO, comprised of chairman and CEO Hector Ruiz and president and COO Dirk Meyer. In addition, under the terms of the acquisition agreement, two ATI directors will join AMD’s board of directors upon closing of the transaction.
"In 2008 and beyond, AMD aims to move beyond current technological configurations to transform processing technologies, with silicon-specific platforms that integrate microprocessors and graphics processors to address the growing need for general-purpose, media-centric, data-centric and graphic-centric performance. Thus, the combined company intends to empower its customers to create their own unique products and solutions within an open-innovation ecosystem free from artificial barriers to customer success."
"This combination means accelerated growth for ATI, and broader horizons for our employees," said Orton, in the release. "All of our product lines will 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."
"Windows Vista will deliver incredible advances in the user experience as a result of advancements in graphics integration and performance," added Jim Allchin, co-president of Microsoft’s platforms and services division. "We’re excited by the potential of what AMD and ATI can deliver together to enhance the Windows Vista experience for our customers even further."
Under the terms of the transaction, AMD will acquire all of the outstanding common shares of ATI for a combination of $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 $18.26 a share, the consideration for each outstanding share of ATI common stock would be $20.47, comprised of $16.40 of cash and 0.2229 shares of AMD common stock.
