Update: AMD’s Acquisition of Xilinx Receives Regulatory Go, Deal Closes At $49B
by Ryan Smith on February 14, 2022 9:30 AM EST
Update 02/14: AMD has sent out a brief statement this morning announcing that the Xilinx deal has formally closed. AMD has now fully acquired Xilinx. The final value of the deal, based on AMD's stock price at the closing, was $49B. Which according to AMD is the largest semiconductor acquisition in history.
Original Story, 02/10:
Although it’s taken a bit longer than planned, AMD’s acquisition of Xilinx has finally cleared the last regulatory hurdles. With the expiration of the mandatory HSR waiting period in the United States, AMD and Xilinx now have all of the necessary regulatory approval to close the deal, and AMD expects to complete its roughly $53 billion acquisition of the FPGA maker on or around February 14th, 2 business days from now.
Having previously received approval from Chinese regulators late last month, the final step in AMD’s acquisition of Xilinx has been waiting out the mandatory Hart-Scott-Rodino (HSR) Act waiting period, which gives US regulators time to review the deal, and take more action if necessary. That waiting period ended yesterday, February 9th, with no action taken by the US, meaning that the US will not be moving to block the deal, and giving AMD and Xilinx the green light to close on it.
With all the necessary approvals acquired, AMD and Xilinx are now moving quickly to finally consummate the acquisition. AMD expects to complete that process in two more business days, putting the closure of the deal on (or around) February 14th – which is fittingly enough Valentine’s Day.
16 months in the making, AMD’s acquisition of Xilinx is the biggest acquisition ever for the Texas-based company. The all-stock transaction was valued at $35 billion at the time the deal was announced, offering 1.7234 shares of AMD stock for each Xilinx share. Since then, AMD’s stock price has increased by almost 51% to $125/share, which will put the final price tag on the deal at close to $53 billion – which is almost a third of AMD’s entire market capitalization and underscores the importance of this deal to AMD. Once the deal closes, Xilinx’s current stockholders will find themselves owning roughly 26% of AMD, while AMD’s existing stockholders hold the remaining 74%.
Having rebounded from their darkest days last decade, AMD has since shifted into looking at how to further grow the company, both by increasing its market share in its traditional products like CPUs and GPUs, as well as by expanding into new markets entirely. In particular, AMD has turned its eye towards expanding their presence in the data center market, which has seen strong and sustained growth for virtually everyone involved.
With AMD’s recent growth in the enterprise space with its Zen-based EPYC processor lines, a natural evolution one might conclude would be synergizing high-performance compute with adaptable logic under one roof, which is precisely the conclusion that Intel also came to several years ago. To that end, the high-performance FPGA markets, as well as SmartNICs, adaptive SoCs, and other controllable logic driven by FPGAs represent a promising avenue for future growth for AMD – and one they were willing to pay significantly for.
Overall, this marks the second major industry acquisition to be resolved this week. While NVIDIA’s takeover of Arm was shut down, AMD’s acquisition of Xilinx will close out the week on a happier ending. Ultimately, both deals underscore just how lucrative the market is for data center-class processors, and to what lengths chipmakers will go to secure a piece of that growing market.
Source: AMD IR
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flgt - Saturday, February 12, 2022 - link
What I don’t understand is why the shareholders in the company being sold accept that deal. Is it assumed they’ll be able to exit their positions before the stock price drops? If the big investors all know it’s overvalued you wouldn’t think they would hold on to it. I should have taken more business classes I guess. I’m sure there are some tax reasons for structuring the deals a certain way as well.whatthe123 - Saturday, February 12, 2022 - link
some people will surely cash out. xilinx's stock value wasn't as massively inflated when they set up the deal so it was largely in their favor, similar to getting years worth of stock growth immediately. Semi business is generally pretty risky, with high potential for disruption long term (like whats happening with AMD and Intel now) so just because things look good short term doesn't mean they'll be rosy 5 years from now. If intel becomes competently managed then Altera could swing back and provide real competition to xilinx.mode_13h - Saturday, February 12, 2022 - link
> its overvalued and a good time to spend stock on acquisitions.Exactly. AMD had to make some big acquisitions.
I'm honestly surprised they haven't snapped up any deep learning ASIC companies. They seem to believe this space will continue to be dominated by GPU-like architectures, but that's really going against the trend. You want less data movement than GPUs require. Look at Tenstorrent and Cerebras - they're all about having huge chunks of on-die SRAM.
I mean, I guess AMD could just beef up the SRAM in their next CDNA chip, but I'm still not sure it's that simple for them to be competitive.
mode_13h - Saturday, February 12, 2022 - link
> These deals always have to be predicated on 1+1=3.> That could be killing off competition so you can raise prices.
> Or it can be a technology enabler for a product that will take market share.
> I just don't see either happening given the markets the two companies play in.
It's a play for the datacenter. I think AMD is betting big on things like software-defined networking, deep packet inspection, threat detection, etc. It's someone akin to the way Nvidia is integrating GPUs into Mellanox network cards.
Xajel - Friday, February 11, 2022 - link
It's a whole new market for them, and a profitable one also.They can incorporate both technologies to sell as a package, and in the future, they can have some exclusive technologies as well like adding an FPGA chiplet in their pro products (special line of Threadripper, Instinct, EPYC) where the user can program it for their needs to accelerate things, even some OEMs can use it as well to promote faster processing, in the far future, even regular consumers can benefit from this if FPGA becomes cheaper, like adding new media decoding, even games could make use of it for their needs (RT, ML, AI, etc..).
The Chinese rules for the acquisition apply for 6 years if I understood correctly in my quick read, and beyond that, they can do more exclusive technologies.
TheReason8286 - Friday, February 11, 2022 - link
Yeap. That's just the Chinese market though. They can bundle in all the other markets lol. I just want to see what it looks like when all 3 giants are on equal financial footing.mode_13h - Saturday, February 12, 2022 - link
I'm skeptical about how big the gap is where it makes sense to use FPGAs rather than CPUs, GPUs, or ASICs.Intel announced plans to include Altera FPGAs in some of their Xeons, starting with Broadwell. To my knowledge, they never followed through with it. I think that's telling.
Wereweeb - Friday, February 11, 2022 - link
Have y'all never heard about CPU's increasingly becoming a "sea of accelerators"? Integrating programmable logic that can become any kind of accelerator could be a way to cater to a huge variety of existing workloads for which dedicated hard logic doesn't make any economic sense - not to speak of the possibility of allowing older CPU's to adopt new standards of e.g. video decoding.E.g. for you g*mers: what if AAA games could have dedicated accelerators, maybe for their AI? Decompression?
As for servers, I'd imagine it has something to do with having some hardware capable of tagging along with their rapidly evolving necessities, since IIRC servers are now usually replaced on a 5-year basis. And for data processing.
Wereweeb - Friday, February 11, 2022 - link
Although I'd imagine an "Ubisoft AI accelerator" would just use your PC to mine bitcoin.Qasar - Friday, February 11, 2022 - link
"E.g. for you g*mers: what if AAA games could have dedicated accelerators, maybe for their AI? Decompression? "gamers already had something like that, it was called Physics.