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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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RE: Not such a stupid move
By DigitalFreak on 7/22/2006 11:18:17 AM , Rating: 2
quote:
K8L is going to nail Conroe


Stop spewing bullshit. You have no idea how K8L will perform.


RE: Not such a stupid move
By BitJunkie on 7/22/2006 5:01:19 PM , Rating: 2
Nobody know's how K8L they're going to perform. But look at history, look at their track record. Also from a purely Darwinian perspective, they HAVE to outperform Conroe if they want to stay in competition, I don't believe a company that's investing in people, talent and production capacity, after fighting so hard to win market share is going to do anything else.

Lets hope Selective Evolution has some effect on mindless posts and trolls too.....okay who am I kidding that's less likely than AMD delivering the goods.


RE: Not such a stupid move
By BitJunkie on 7/23/2006 1:18:26 PM , Rating: 2
The key is how they perform the integration. If they're aiming to integrate GPU functionality on the CPUs, they have a couple of issues:

1) Who's technology do they use? How do they license it and how vulnerable does that leave their business if they opt to license technology.
2) Developing in-house Graphics capabilities puts them on a massive learning curve, places them in direct competion and introduces time constraints, they aren't going to be able to develop a competative solution in the 18 month timeframe
3) People, they don't grow on trees, even if the could develop their in-house capablities they'd be seriously constrained in terms of manpower.

This aquisition enables them to innovate relatively freely without concerns for the above issues. I don't think they're just going to develop a set of current day chip-sets, including a discrete GPU. That's not moving forward, it's just competing with whats around at the moment.

The next question is IF they manage to integrate ATI based GPU functionality in to a CPU, and see very real performance improvemnts - how do Intel compete?


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