In a $5.4 billion deal, Advanced Micro Devices, (AMD), announced today plans to acquire graphics giant, ATI Technologies.
The deal, a mixture of cash and stock purchases, will immediately have a major impact on the semiconductor industry. AMD is already saying that the deal will create a “processing powerhouse,” said a press release today.
The deal will also offer new challenges to arch-rival Intel for control of the computer processor market.
The New York Times is reporting that a settling computer sales market may pose a challenge to the companies, especially in the graphics-intensive high-end PC market which has reached a plateau according to some analysts.
ATI has been a driving force in the technology world in its competitive showdown with NVIDIA over the years. The Times also reported that strong handhold sales helped ATI present a 120 percent increase in consumer sales.
The public relations initiative has been strong so far. AMD hosted a conference call and webcast at 8:00 a.m. today to discuss the deal and the financial impact on both companies. According to the press release, AMD anticipates reducing operating costs by $75 million by the end of 2007. The executive response has also been strong so far.
AMD has also posted a fact sheet illustrating the details of the acquisition.
“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.”
AMD shares slipped around 6 percent in early morning trading. ATI stock is up almost 16 percent early on.