The acquisition will bolster AMD’s presence in the burgeoning data center chip market, making it a more formidable foe to rival Intel.
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“Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world,” said AMD CEO Lisa Su in a statement.
Under the terms of the agreement, Xilinx shareholders will receive 1.7234 AMD shares for each Xilinx share they own. The price equates to approximately $143 per share, or a 25% premium to Monday's closing value of $114.55.
AMD shareholders will own approximately 74% of the combined company while Xilinx shareholders will control the remaining approximately 26%.
AMD expects $300 million of efficiencies within 18 months of the transaction's closing due to synergies in costs of goods sold, shared infrastructure and the combination of common areas.
The deal, which will be immediately accretive to AMD's margins, earnings per share and free cash flow, is expected to close by the end of 2021. It is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.