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Reports claim a $5.6B deal is about to close on an unprecedented merger

According to a report in The Globe and Mail, the board of directors at AMD has allegedly approved the takeover of Canadian graphics firm ATI Technologies. The report claims that the information was released by an investment banker that was part of the discussions. According to other sources, AMD executives were also seen at ATI's headquarters in Markham, Ontario. The report indicated that AMD is considering a $5.6 billion takeover bid for ATI.

Speculation and rumors have run rampant over the last several months about the possible merger between AMD and ATI, but no concrete details have been revealed. According to reports on ATI's share prices, the company's shares have been trading at double the usual volume today. Analysts said that AMD would be making an offer of 20 to 40 percent premium to ATI's current share price. ATI shares traded at $16.12 on the NASDAQ today during after hours, which is up 39 cents from yesterday's closing.

Reuters has also picked up on the story, claiming that "Some analysts have questioned the rationale for an AMD-ATI merger, and others were surprised that the speculation received no attention from analysts during AMD's earnings conference call on Thursday."  DailyTech had punched in for question during the investor conference call on Thursday, but a moderator would not respond.

According to Eric Gomberg, an analyst for investment bank Thomas Weisel Partners, "there has been considerable industry speculation that AMD may pursue an acquisition of ATI Technologies, although such an outcome is by no means certain." Gomberg's comment came in earlier this week, but word circulating around investment bankers who are aware of the talks between ATI and AMD surfaced just several hours ago.

Recent reports indicated that Intel roadmaps no longer included ATI chipsets. Although Intel had been producing motherboards using ATI logic, upcoming boards like those that support Core 2 processors are void of any chipset from ATI. Interestingly, ATI and Intel had agreed to several cross-licensing programs that allowed them to take advantage of some of each other's technologies. Several analysts however, indicated that the merger between AMD and ATI to be "out of strategy for AMD and out of focus. Stupidity is no barrier to tech mergers."

A report in the Wall Street Journal confirms the talks between AMD and ATI (subscription required) today. Although the deal is not final, the report said that representatives from both companies declined to comment.

AMD has previously indicated that it would embrace embedded processor technologies for its Torrenza platform -- some of which would include math and physics co-processors.  However, the company has recently exited all non-x86 processor design.

Update 07/24/2006: AMD and ATI jointly announced the confirmation of the $5.4B merger today (July 24, 2006)

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Will Intel Buy nVIDIA?
By TomZ on 7/22/2006 8:09:57 AM , Rating: 2
If ATI provides some strategic advantage to AMD, then does it follow that nVIDIA might also provide a similar advantage to Intel? Does anybody see Intel reacting with an offer to purchase nVIDIA?

RE: Will Intel Buy nVIDIA?
By killerroach on 7/22/2006 8:38:20 AM , Rating: 1
Since I don't see Intel getting into the discrete graphics business, then no. Intel still makes what is arguably the best chipset for their platform, nVidia's IGP tech isn't that great, and nVidia doesn't seem to have a lot of tech to offer Intel, who spends an obscene amount of money on R&D.

That being said, it's possible, but only a couple of years down the road. I think right now regulators would scream bloody murder if Intel bought the company who makes most of the motherboard chipsets for the AMD platform.

RE: Will Intel Buy nVIDIA?
By L1NUXownz1fUR1337 on 7/22/2006 11:15:28 AM , Rating: 1

The intel ceo is too busy playing golf and figuring out how to reduce intel from 100,000 employees to 40,000.

He just reduced the amount of people reporting to him so he concentrate more on golf.. uh.. - i mean layoffs

I think he's too busy to think about improving/growing the company.

RE: Will Intel Buy nVIDIA?
By TomZ on 7/22/2006 12:58:10 PM , Rating: 3
Sorry, I was actually looking for some intelligent replies, not just a load of crap. I guess I'll try again later.

RE: Will Intel Buy nVIDIA?
By shecknoscopy on 7/22/2006 3:16:10 PM , Rating: 1
Sorry, I was actually looking for some intelligent replies, not just a load of crap. I guess I'll try again later.

What - did you accidentally type something into this site, thinking you were reading the Inquirer? The dude *does* like golf, and he totally tents for layoffs. But again, by the same sensationalist media-fed jargon, the AMD CEO's too busy polluting Texas and killing adorably misrepresentative animated sallimanders to care about ATI.

Of course, who here thinks polluting texas is a bad thing? Show of hands? Bueller?

Anyway, one way I could see this going is having intel court nVidia to supply SLI support for all the intel chipsets which currently have only been Crossfire capibile. In the present situation, it clearly benefits both companies, whewreas nVidia's had a modest arguement against it previously. Considering that dual graphics solutions are becoming less and less the territory of the "bleeding edge" gamer, and are anticipated to seep progressively into the mainstream market, I can't imagine either company'd want to find the other side at a substantial advantage.

RE: Will Intel Buy nVIDIA?
By Locutus465 on 7/22/2006 8:28:34 PM , Rating: 2
They have been in the descreate graphics business before... In fact for a long time they were the leaders in AGP graphics cards...

RE: Will Intel Buy nVIDIA?
By masher2 on 7/22/2006 1:20:08 PM , Rating: 2
> "Does anybody see Intel reacting with an offer to purchase nVIDIA?"

Intel won't consider it, as such a merger wouldn't get FTC approval, given their dominant position in integrated graphics solutions.

RE: Will Intel Buy nVIDIA?
By Knish on 7/22/2006 4:24:24 PM , Rating: 2
If ATI provides some strategic advantage to AMD, then does it follow that nVIDIA might also provide a similar advantage to Intel? Does anybody see Intel reacting with an offer to purchase nVIDIA?

I think masher said it already but I couldn't find the comment to link back. Intel + NVIDIA would almost never go through the FTC, and NVIDIA is not hurting all all right now as far as stock prices and all. Neither ATI nor AMD were doing very well this year financially, but who knows.

As for the 5.6 billion: considering what AMD has spent on fabs this year alone, the 5.6 billion seems like a decent price to spend.

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