NEW YORK, 25 July 2006 — AMD and ATI plan to join forces in a transaction that will combine AMD’s technology leadership in microprocessors with ATI’s strengths in graphics, chipsets and consumer electronics.
The companies hope the merger will create a new competitor, better equipped to drive growth, innovation and choice for its customers in commercial and mobile computing segments and in the rapidly-growing consumer electronics segments.
The transaction, valued at $5.4 billion, is expected to close in Q4 2006 subject to approval by ATI shareholders and other customary closing conditions.
AMD’s acquisition of ATI will position the new company to deliver innovations that fulfill the increasing demand for more integrated solutions in key market segments while also continuing to develop “best-of-breed” discrete products that empower customers to choose the combination of technologies that best serves their needs.
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. 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.
“ATI shares our passion and complements our strengths: technology leadership and customer centric innovation,” said AMD Chairman and CEO Hector Ruiz. “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.” “This combination means accelerated growth for ATI, and broader horizons for our employees,” commented Dave Orton, president and CEO of ATI. “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,” said 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 upon the closing price of AMD common stock on July 21 of $18.26 a share, the consideration for each outstanding share of ATI common stock would be $20.47, comprising $16.40 of cash and 0.2229 shares of AMD common stock. AMD anticipates it will finance the cash portion of the transaction with a combination of cash and new debt. AMD has obtained a $2.5 billion term loan commitment from Morgan Stanley Senior Funding, Inc. which, together with combined existing cash, cash equivalents, and short-term investments balances of approximately $3 billion, provides full funding for the transaction.
AMD expects that the transaction will be slightly accretive to earnings in 2007, and meaningfully accretive in 2008. AMD anticipates that it will reduce operating expenses by approximately $75 million for the combined company by the end of 2007. The combined company would have achieved approximately $7.3 billion in total consolidated sales during the last four quarters with a work force of approximately 15,000 employees. 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.
MD’s current executive team will be complemented by the addition of ATI President and CEO Dave Orton, who will serve as an executive vice president of the ATI business division, reporting to the AMD Office of the CEO, comprising Chairman and CEO Hector 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.
