News 

The main motive behind the move, states AMD, is its intent to overhaul traditional processor configurations - to better integrate microprocessors and graphics processors for the growing demands for multimedia performance.

Under the terms of the deal, AMD will acquire all ATI shares (priced at $20.47) through a combination of $4.2 billion in cash (80 per cent of the transaction) and 57 million shares of AMD common stock (20 per cent). The company anticipates it will finance the cash portion of the transaction with a combination of cash and new debt. To this end, AMD has obtained a $2.5 billion loan from Morgan Stanley Senior Funding, with existing cash reserves meeting the balance.

The combined company will have an approximate workforce of 15,000 and have combined revenues of $7.3bn from the last four qarters, and the headquarters will be in AMD's Sunnyvale, California. AMD's current executive team will be joined by ATI President and CEO Dave Orton, who will serve as an executive vice president of the ATI business division.

AMD

ADVERTISEMENT

is confident the deal will add to its bottom line by as soon as 2007, and be 'meaningfully accretive in 2008'.

'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,' he added.

For ATI's part, the President and CEO Dave Orton declared: 'This combination means accelerated growth for ATI, and broader horizons for our employees. 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.'

With the increasing emphasis on multimedia computing, the merger can also be related to the long-awaited arrival of Vista, the next generation Windows operating system. Jim Allchin, Co-President of Microsoft's Platforms & Services Division, was keen to make the link. '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,' Allchin is quoted in the official announcement.

Hector Ruiz will be holding a conference call later this afternoon, so more details may emerge.