Advanced Micro Devices has reached an agreement to buy Xilinx in an all-stock transaction valued at $35 billion.
Under the terms of the deal, Xilinx stockholders would get 1.7 shares of AMD common stock for each Xilinx share, valuing Xilinx at $143 per share. After closing, AMD stockholders would own approximately 74% of the combined company.
Xilinx CEO Victor Peng will join AMD as president responsible for the Xilinx business and strategic growth initiatives. At least two Xilinx directors will join the AMD board.
In a statement, AMD said the acquisition would significantly expand the breadth of its product portfolio and customer set across diverse growth markets. It said it expects to achieve operational efficiencies of approximately $300 million within 18 months of closing.
“This is truly a compelling combination that will create significant value for all stakeholders, including AMD and Xilinx shareholders who will benefit from the future growth and upside potential of the combined company,” AMD chief executive officer Lisa Su said.
In a note, Tristan Gerra, an analyst at Baird, said the deal appeared neutral. “However, accretion starting in 2022 would be timely given our expectation for a slowdown in AMD’s market share gains in both PCs and data center starting next year,” he said.
AMD reported revenue of $1.67 billion for the third quarter for its computing and graphics segment, an increase of 31% year over year. It’s enterprise, embedded, and semi-custom segment reported revenue of $1.13 billion, up 116%. Its earnings of $2.8 billion beat expectations.
AMD shares were down more than 3% Tuesday morning. Xilinx shares were up nearly 10%.
The deal is expected to close by the end of calendar year 2021.