Xilinx rockets 17% after finalising $35 billion sale to AMD

ReutersA Xilinx sign is seen during the China International Import Expo (CIIE), at the National Exhibition and Convention Centre in Shanghai

Xilinx surged as much as 17% in early Tuesday trading after Advanced Micro Devices agreed to buy the chipmaker for $US35 billion.

The deal is expected to close by the end of 2021, according to a press release. AMD’s all-stock purchase will grant current Xilinx shareholders 1.7234 shares of AMD for each Xilinx share they own. Current AMD shareholders will own 74% of the new company, while Xilinx investors will own the remaining 26%.

The combined entity will boast more than 13,000 engineers and help both firms compete with lagging industry titan Intel. AMD also expects to unlock roughly $US300 million worth of operational efficiencies through the deal over the next 18 months.

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Still, AMD shares fell slightly in early Tuesday trading.

Xilinx similarly rallied on October 9 after The Wall Street Journal first reported on the potential AMD deal. The leap placed shares at their highest point since July 2019.

The acquisition is the latest mega-deal to hit the semiconductor sector this year. It dwarfs Analogue Devices’ purchase of Maxim Integrated Products for $US20 billion and falls just short of tying Nvidia $US40 billion takeover of Arm Holdings.

Xilinx produces chips used in data centres and 5G base stations, giving AMD a major leg-up in the communications technology business. It also alleviates some concerns around future revenue. Xilinx shares tumbled through 2019 after US-China trade tensions limited shipments from Huawei. The Chinese tech giant accounts for 8% of Xilinx’s revenue.

Xilinx closed at $US114.55 per share on Monday, up about 17% year-to-date.

AMD closed at $US82.23, up roughly 81% year-to-date.

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