The deal, which is the second of its magnitude for this year alone, is set to be AMD’s biggest acquisition to date, It is currently valued at around one-third of AMD’s market capitalization prior to the acquisition.
Currently, AMD’s primarily provides CPU and GPU for computer systems and create embedded for gaming consoles (i.e. Sony’s Playstation 5). AMD’s acquisition of Xilinx will help expand AMDs business beyond providing cost-effective yet powerful CPUs and GPUs that are widely used in consoles and computers, helping the company gain access to clients in the cloud-based computing services, telecommunications industry, and networking.
“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,” stated AMD CEO Dr. Lisa Su.
For the unfamiliar, Xilinx a California-based company founded in 1984 is largely known as the pioneer behind Field Programmable Gate Array (FPGA) technology. FPGAs are widely used in advanced microprocessor applications including advanced cloud computing, artificial intelligence, 5G telecommunication networks and data center systems.
In a statement, Victor Peng, CEO and President of Xilinx shared his excitement over the merger, saying that he believed in both company’s “shared culture of innovation, excellence and collaboration” Peng also mentioned that this merger would “lead an era of high performance and adaptive computing” allowing the merged companies access a far-wider client reach with different businesses and customers across all spectrum.
According to AMD’s press release, with this merger, the all-stock transaction will result in AMD stockholders owning 74 percent of the combined company while Xilinx stockholders will own the remaining 26 percent. Xilinx stockholders will also receive a fixed ratio of AMD common stock per Xilinx common stock at 1.7234 shares as the transaction is being closed out.
In terms of manpower, AMD will now have a team of 13,000 engineers and will have an addressable market worth $110 billion. Meanwhile, in terms of operational efficiency, AMD targets to achieve $300 million within 18 months of closing the transaction, primarily based on “shared infrastructure, goods sold and streamlining common areas.”
Under this acquisition, Dr. Lisa Su will remain as CEO of the merged companies while Xilinx CEO and President Victor Peng will retain his title as president and shall lead “business and strategic growth initiatives.” AMD’s Board of Directors will at least gain two more directors from Xilinx. The addition of Xilinx executives in AMD’s management roster will be effective as soon as the transaction is closed.
The acquisition is expected to be closed out sometime next year. Until it is closed out however both companies shall remain as independent and separate entities.