AMD to buy rival chipmaker Xilinx in $35bn all-stock deal

Advanced Micro Devices agreed to buy rival chipmaker Xilinx in a $35bn all-stock deal, as it looks to beef up its growing data centre business.

The deal, which is expected to close by the end of 2021, would create a combined company with 13,000 engineers and more than $2.7bn in annual research and development spending. AMD said the deal would generate $300m in cost savings within 18 months.

The combination of the two California-based companies — AMD’s largest acquisition to date — is expected to intensify its battle with Intel for a bigger slice of the lucrative market for making chips used in data centres. AMD also designs chipsets for computers and gaming consoles, both of which have attracted robust demand this year with the shift to remote working and at-home entertainment during the pandemic.

“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,” said Lisa Su, AMD chief executive.

Xilinx shareholders will receive about 1.72 shares of AMD common stock per Xilinx share. That would value Xilinx at $143 a share, or 24.8 per cent higher than its closing price on Monday.

Current AMD shareholders will own 74 per cent of the combined company, and Xilinx shareholders will own the remaining 26 per cent.

AMD also reported quarterly earnings on Tuesday, posting a 56 per cent increase in revenue year on year for the three months to the end of September. Adjusted earnings per share of 41 cents topped analysts’ forecast for 36 cents.

Shares in AMD were down more than 4 per cent in pre-market trading. Xilinx jumped 10 per cent.