http://www.amd.com/us-en/Corporate/VirtualPressRoom/0,,51_104_543~110899,00.
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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.
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. 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," 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.
ATI has received an opinion from its financial advisors that the
transaction
from a financial point of view is fair to its shareholders. The
transaction
was unanimously approved by the board of directors of each company. The
transaction is subject to ATI shareholder approval, Canadian court
supervision of a Plan of Arrangement, and other regulatory approvals
including merger notification filings in the United States, Canada and
other
jurisdictions, as well as customary closing conditions. In the event that
the transaction does not close, ATI has agreed to pay AMD a termination
fee
of $162.0 million under circumstances specified in the acquisition
agreement. The transaction is expected to be completed in the fourth
quarter
of 2006.
A Compelling Financial Opportunity
AMD expects that the transaction will be slightly accretive to earnings in
2007, and meaningfully accretive in 2008, before the inclusion of ATI
acquisition-related charges, based upon AMD's plans to deliver more
integrated and advanced platform solutions and thereby improve its
position
in commercial clients, mobile computing, gaming, media and emerging
markets.
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 billion1 in
total consolidated sales during the last four quarters with a workforce 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
- all valued centers of innovation for the combined company. AMD's current
executive team will be complemented by the addition of ATI President and
CEO
Dave Orton. 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 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.
The collective roster of AMD and ATI's strong customer relationships
represents a "who's who" of the computing and consumer electronics
industries. Drawing upon a shared culture of customer-centric innovation
and
engineering excellence, the combined company will be well positioned to
meet
customer demand for more innovative solutions, system-level engineering
and
faster time-to-market.
Conference Call
The companies will host a financial analyst and press conference call
today
at 8 a.m. EDT (5 a.m. PDT). The call can be accessed at 612-326-1027
(U.S.).
Audio of the conference call will be available live and also
http://www.amd.com/announcement.
For those unable to listen to the live call, a telephone replay will be
available beginning July 24, 2006 at approximately 11:00 a.m. EDT through
July 30, 2006. That call can be accessed by dialing 800-475-6701 (U.S.) or
320-365-3844 (international) with conference call ID 837580.
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).
