Advanced Micro Devices (AMD) said today it would acquire graphics chip maker ATI Technologies for $5.4 billion in cash and stock.
Under terms of the deal, AMD will acquire all of the outstanding common shares of ATI for $4.2 billion in cash and 57 million shares of AMD common stock, based on the number of shares of ATI common stock outstanding on July 21st.
AMD said it would pay $20.47 for each ATI share. That marks a 24 per cent premium over ATI's closing stock price of $16.56 on Nasdaq on Friday. The stock added another 7 per cent to $17.68 in after-hours trading amid media reports of the expected deal.
The consideration for each outstanding share of ATI comprises $16.40 in cash and 0.2229 shares of AMD common stock, the companies said.
AMD, the second-ranked supplier of computer processors after Intel, said it expects to finance the cash portion of the transaction with a combination of cash and new debt.
ATI said it has agreed to a termination fee of $162 million. The deal is subject to the approval of ATI shareholders and regulators in the United States and Canada.
Talk of a tie-up between the two companies first emerged in May, but many industry analysts have said it made little financial or strategic sense for AMD to buy ATI outright.