AMD to acquire ATI for $5.4 Billion

[Matrixhasu77]

The following is a press release by AMD:

AMD and ATI to Create Processing Powerhouse

- $5.4 Billion Acquisition Will Drive Growth, Innovation and Choice -

- AMD and ATI to Hold Joint Executive Conference Call Today at 8:00 a.m. EDT -

NEW YORK -- July 24, 2006 --AMD (NYSE: AMD) and ATI (TSX: ATY, NASDAQ: ATYT) today announced plans to join forces in a transaction valued at approximately $5.4 billion. 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. The result: A new and more formidable company, determined to drive growth, innovation and choice for its customers, particularly in the commercial and mobile computing segments and in the rapidly-growing consumer electronics market. 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.

“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,” said 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 & 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.

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 $3.0 billion, provides full funding for the transaction.

About AMD
Advanced Micro Devices (NYSE: AMD) is a leading global provider of innovative microprocessor solutions for computing, communications and consumer electronics markets. Founded in 1969, AMD is dedicated to delivering superior computing solutions based on customer needs that empower users worldwide. For more information visit www.amd.com.

About ATI
ATI Technologies Inc. is a world leader in the design and manufacture of innovative 3D graphics, PC platform technologies and digital media silicon solutions. An industry pioneer since 1985, ATI is the world's foremost graphics processor unit (GPU) provider and is dedicated to deliver leading-edge performance solutions for the full range of PC and Mac desktop and notebook platforms, workstation, set-top and digital television, game console and handheld device markets. With fiscal 2005 revenues of US $2.2 billion, ATI has approximately 4,000 employees in the Americas, Europe and Asia. ATI common shares trade on NASDAQ (ATYT) and the Toronto Stock Exchange (ATY).

Source: AMD Press Release
HardOCP Article: AMD & ATI - Some Questions Answered
DriverHeaven.net: Interview with Jon Carvill

Comments on AMD's acquisition of ATI? This could definately give AMD a huge advantage over Intel in the personal computer market... However, it is somewhat early to tell what the consequences/advantages of such a merger.

 

[Event]

Hmmm.... I don't know what to think...

 

[dougiemeats]

Yeah me neither. I'm going to sit back and see how this turns out. I'm primarily a Mac user, so it won't affect me much, but this will be interesting to see.

 

[Burnout]

Yeah me neither. I'm going to sit back and see how this turns out. I'm primarily a Mac user, so it won't affect me much, but this will be interesting to see.

Mac has been using a lot of ATi in their newer models, which have been using Intel processors..

 

[Event]

Mac has been using a lot of ATi in their newer models, which have been using Intel processors..

Won't matter though. ATi Cards will still work with Intel Proc's. Just the money and ideas will be handled differently

 

[dougiemeats]

I meant to say that my next Mac purchase would be a MacBook, which has no dedicated card.

 

[guska]

Well, since I only use AMD processors, and ATI Graphics cards, this should be a positive for me, as presumably the graphics cards will be optimised to run the best with the AMD chipset, rather than a compromise between AMD and unInteligent*



*this was a joke, just in case anyone gets offended

 

[Event]

Well, since I only use AMD processors, and ATI Graphics cards, this should be a positive for me, as presumably the graphics cards will be optimised to run the best with the AMD chipset, rather than a compromise between AMD and unInteligent*



*this was a joke, just in case anyone gets offended

If you plan an building/getting a new computer with an AMD chip, you are an ignorant idiot.

There's no reason at all to get an AMD right now, unless you're only upgrading an AMD computer or you're REALLY short on funds. Intel's Core 2 Duo Conroe beats AMD in every category.

Never side with one side, because the tables can turn and your fanboy tendencies may screw you into getting something that is a really bad deal.

 

[emad]

Mac has been using a lot of ATi in their newer models, which have been using Intel processors..

Apple will be dropping ATI cards within the year in favour of Nvidia for obvious reasons. For even more obvious reasons, Intel has already revoked ATI's license for the crossfire chipsets.

It will be interesting to see how this turns out now since anyone wanting to go the multi-gpu route with an intel cpu will be forced to go Nvidia. ATI was already struggling in the multi video card market and their high end chips leave something to be desired as it is. Now they've lost a good chunk of it to Nvidia thanks to licencing issues, Will we see the video card oligopoly for high end video cards turn to a monopoly over time? Or will Intel acquire Nvidia, forcing AMD to revoke the nforce licence and thus force intel buyers to go nvidia and amd buyers to go ati? It will be even more interesting if Intel decides to go high end with their onboard video cards

 

[dougiemeats]

Is this speculation or something that Apple has confirmed? I take back my statement about this not affecting Mac users much.

 

[emad]

Speculation according to ZDNet but it's extremely likely it seems

It also seems Intel's dropping of crossfire support is also an unfounded rumor.

 

[dougiemeats]

Thanks for the links, emad.

 

[ROAD_DOGG33J]

It's good that ATI will still continue making their chipset for Intel.

 

[PLmatt91]

Intel and nVidia should join now. Then we'd be pwning every one.

 

[Evolution.]

I've always been AMD & nVidia. I have null experience with Intels, and I owned a Radeon 9550 for about 6 months.

 

[ozyran]

I have one word for Intel: over-engineered (new-fangled English). They run an excessive clockspeed to bus speed ratio, IMO.
I'm looking forward to seeing what AMD and ATi have up their sleeve and how this will affect the future of the gaming industry. Right now I'm planning an upgrade to an SLI-based board in October, but that may change, depending on what the outcome of this new acquisition by AMD nets. I also believe that there will be a lot of speculation and rumors floating around for a while, and anyone planning on doing any upgrading will have to step lightly.

 

[emad]

I have one word for Intel: over-engineered (new-fangled English). They run an excessive clockspeed to bus speed ratio, IMO.
I'm looking forward to seeing what AMD and ATi have up their sleeve and how this will affect the future of the gaming industry. Right now I'm planning an upgrade to an SLI-based board in October, but that may change, depending on what the outcome of this new acquisition by AMD nets. I also believe that there will be a lot of speculation and rumors floating around for a while, and anyone planning on doing any upgrading will have to step lightly.

Overengineered or not, the Core 2 duo is a huge step up in processor technology. AMD has no chance of maintaining their top spot till their next cpu release which doesn't have a launch date yet

 

[ozyran]

No chance? Maybe on paper. We'll have to see how AMD fares against Intel in the benchmark testing that's soon to happen when the CPU hits the market. My AMD Athlon 64 3200+ runs a frontside bus speed that's only 66 MHz slower than the new, unreleased Intel top of the line processor - and that's an Athlon 3200+, one of their "oldie goldies" in the processor world now.
Well, I could go on ranting and raving, but I'll let Cnet give an example of what AMD's top of the line and Intel's top of the line (albeit, not Core 2 Duo) do compared to one another. And, scoping out the new Intel processor, I'd say that the only advantage it has is the L2 cache. Here's the specs on AMD's top AM2 processor compared to the new Core 2 Duo processor (limitations due to lack of information prodived by Intel as of yet):
Name..........................Cache....................CPU Clock...............FSB clock
Intel Core 2 Duo............4 MB L2..................2.93 GHz................1066 MHz
AMD Athlon 64 FX62.......2 MB L2..................2.80 GHz................1000 MHz

The way I see it, Intel's finally caught up to AMD's current on the shelf top-of-the-line processor. Like I said before, they're overengineered. Besides, with AMD running with ATi by their side, there should be some hot developments in the works for gaming PC setups. But, we'll see here soon enough.

 

[guska]

If you plan an building/getting a new computer with an AMD chip, you are an ignorant idiot.

There's no reason at all to get an AMD right now, unless you're only upgrading an AMD computer or you're REALLY short on funds. Intel's Core 2 Duo Conroe beats AMD in every category.

Never side with one side, because the tables can turn and your fanboy tendencies may screw you into getting something that is a really bad deal.

I wouldn't call myself a fanboy, as I can see the merits and limitations of both chips. However I have personally had a bad run with Intel chips, so I choose to stick with AMD. It is a personal choice, and I do not appreciate being called an ignorant idiot. My next upgrade will be a full rebuild, with new board, chip, RAM, video and sound cards. When the time comes, I will make the decision as to what chipset to get, based on what is available at the time, and what I plan to use it for, as well as compatibility with later chips (ie, socket/slot type that isn't going to be replaced within a few models). So please, do not preach to me about people who use AMD being ignorant idiots, as that is simply a closed minded view.

 

[dougiemeats]

Don't take it too personal, Gooseter. Ignore the first part of the post; the last sentence is actually very good advice.

 

[ozyran]

Very true. However, there are ways of getting one's point across besides flaming someone who has an opposing view. Coming in and calling another person an idiot is definitely not the right way to bring across a post, and goes against good posting practices.

Never side with one side, because the tables can turn and your fanboy tendencies may screw you into getting something that is a really bad deal.

That's very true, Event. And in this case, Intel's new processor may be eclipsed by what AMD cooks up next. Intel has the advantage with their new processor, but now AMD can watch Intel and learn from Intel's mistakes. AMD won't be too far behind in the development of a competitor. You may want to read this review before writing off AMD as a capable corporation. It's an old review, but it's a great comparison of the two companies' processors and how they perform, side-by-side. My question is this: when the new processor comes out, will it require an entirely new motherboard to upgrade to it, or will the use an existing platform?

Now, all that aside, I think that AMD and ATi are both great companies, and it's awesome to see the two working together. Some of the architecture that gets built into the AMD processors could very well carry over into the ATi chipsets. With some game systems utilizing the ATi GPU, this may very well stand to benefit everyone involved. Console gamers could stand to benefit from this new development. In my opinion, AMD has always managed to engineer a great product that gets the job done, and done well.
As for Intel, they may very well be making a turn for the best. They've been running behind the forefront of the CPU curve, and their prices have been traditionally higher than AMDs for a slightly less amount of performance.

 

[dougiemeats]

Event was not, as you say it, "writing off AMD as a capable corporation." Nowhere in his post did he say that AMD was an inferior company compared to Intel. He merely stated the fact that Intel's Conroe processors are superior to AMD's current lineup. The link that you provided features the Pentium D. He mentioned the Core 2 Duo.

 

[ozyran]

Ok, you have a point there. But he also said "There's no reason at all to get an AMD right now", and that sounds to me like someone saying that AMD isn't a worthwhile product.

And you're right. At the time, that was the only one available to use as an example. I did say that it was an old review, did I not?

Here's a comparison just released by Tom's Hardware: http://www.tomshardware.com/2006/07/14/core2_duo_knocks_out_athlon_64/

All I'm saying is that the AMD platform is a very well engineered one, and their 64-bit processors are nothing to sneeze at. AMD isn't ignorant of the new development: http://www.tgdaily.com/2006/07/28/amd_4x4_discussed_at_analysts_meeting/

It seems that they're gearing up for a new all-out performance war.

Now, has anyone heard anything new about the purchase?

 

[dougiemeats]

I haven't read anything new, but this heated competition between the two can only mean good things for us.

 

[ozyran]

I gotta agree with you there. I've been scoping this out through http://www.tomshardware.com and nVidia has decided to develop SLI for the Intel chipsets.

Interesting. Very interesting.

 

[dougiemeats]

Looks like AMD is dropping the ATi name. (Link)

Edit: New link

 

[ROAD_DOGG33J]

That might confuse some people.

 

[sucahyo]

I think this merger is to cover AMD weakness on onboard solution, they say that because of the onchip memory controller, the video bandwith become bottleneck for onboard video solution. I think AMD buy ATI to make the CPU and graphic processor in one core. So when graphic processor want to talk to cpu it doesn't have to go through many link or bus.
It's really a good thing if this is the case. We only need to use single humongous heatsink for both cpu and graphic processor . And we can dream to have 1GHz video card too .