AMD agrees to buy chipmaker Xilinx in US$35b all-stock deal

[SANTA CLARA] Advanced Micro Devices agreed to buy Xilinx for US$35 billion in stock, taking the chipmaker into more diverse and profitable markets and adding to its data centre offerings.

Xilinx investors will get 1.7234 AMD shares for each Xilinx stock they own. That values Xilinx at about US$143 a share, 25 per cent more than the closing price on Monday and 35 per cent above the price before news of a possible deal was reported earlier in October.The deal is a coup for AMD chief executive officer Lisa Su, creating a company with a larger research-and-development budget and a broader array of products to take on Intel Corp.

Since taking over in 2014 when AMD was in crisis, she has slashed debt and overseen the development of more powerful processors. Revenue and profit have surged and the stock has soared. Now Ms Su is using that currency to snap up a company with complementary products that generate steady cash flow.

Some investors and analysts were concerned that AMD might borrow heavily to pay for a Xilinx acquisition, repeating costly mistakes from more than a decade ago. The all-stock deal unveiled on Tuesday should calm those fears.

AMD also reported third-quarter results that beat Wall Street estimates and gave a strong revenue forecast for the current period, buoying confidence in Ms Su's ability to absorb Xilinx and continue growing the combined company. Sales in the fourth quarter will be about US$3 billion, a jump of 41 per cent from a year earlier.

The acquisition still needs to be approved by shareholders and regulators, including authorities in China. AMD estimated that will take about 18 months.

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