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Possible Terms of Acquisition

At press time, ATI’s market capitalization was $3.94 billion, plus, the company had $518.113 million in cash. AMD’s capitalization was $10.9 billion and the chipmaker had $2.63 billion in cash.

It is unknown whether AMD and ATI have actually reached acquisition agreement, but some Chinese web-sites reported late last week that the agreement had been reached. Theoretically, this would mean that AMD may announce the acquisition of ATI as early as on Thursday, July 20, when its Q2 FY2006 results are to be announced, or after market close on the 14th of June, on Friday.

It is obvious, that AMD is unlikely to buy ATI for cash, as it does not have so much resources and it is uncertain whether it is able to take credits anywhere. But AMD may either get the graphics company for the shares of the merged firm, or using a combination of cash and stock.

One have to know, that any potential acquisition deal means stock prices shifts and the fact that quite some sources spread the information about possible AMD-ATI deal may be a result of someone’s desire to manipulate with shares.

“Each time I’ve tried to trace back the source of the rumors and when I have been successful in doing so it's gone back to someone with a financial interest in spreading them,” said Mercury Research principal analyst Dean McCarron.

 
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