Advanced Micro Devices (AMD) today announced plans to acquire PC graphics card maker ATI in a deal valued at about US$5.4 billion.
The combination aims to create a "processing powerhouse" by bringing AMD's technology leadership in microprocessors together with ATI's strengths in graphics, chipsets and consumer electronics, AMD said in a statement.
The purchase is part of the Sunnyvale, C.A.-headquartered company's strategy to move beyond its current technological configurations to "transform processing technologies" in 2008 and beyond.
This includes looking at integrating microprocessors and graphics processors to address what the company believes to be a growing need for general-purpose, media-centric, data-centric and graphic-centric performance.
The combined entity would achieve approximately US$7.3 billion in consolidated sales during the last four fiscal quarters, with a workforce of approximately 15,000 employees. AMD will maintain sales, design and manufacturing centers worldwide and major business centers in Silicon Valley, Austin, Texas and Markham, Ontario.
AMD Chairman and CEO Hector Ruiz said in a statement: "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."
Dave Orton, president and CEO of ATI, views the combination as providing accelerated growth for ATI, and enabling the company to "innovate aggressively" on the PC platform. "All of our product lines will benefit," he stated.
Under the terms of the transaction, AMD will acquire all of the outstanding common shares of ATI for a combination of US$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 Jul. 21, 2006.
The takeover is expected to be finalized by the fourth quarter of 2006, subject to ATI shareholder vote, court approval and regulatory approvals.
AMD, which reported a dismal second quarter, forecasts reduced operating expenses by approximately US$75 million for the combined company by the end of 2007.
Orton will serve as an executive vice president of the ATI business division, reporting to AMD's Ruiz and President and Chief Operating Officer 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.
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