Xilinx to be bought by AMD

AMD and Xilinx shares rose after Chinese regulators gave preliminary approval to the purchase deal announced more than a year ago.

Advanced Micro Devices (AMD) and Xilinx (XLNX) shareholders received positive news last week. China's State Market Regulatory Administration has approved their $35bn equity deal, in which AMD acquires Xilinx and they begin operating as a combined chip company.

Under the terms of the approval, the combined company will have to continue to supply Xilinx products in the country and work with Chinese domestic enterprises, as the Chinese antitrust authority has found that the deal could exclude or restrict competition. The acquisition has already received approval from regulators in the US, Europe and the UK, as well as other jurisdictions. In late December, the companies said they expected to close the deal in the first quarter of 2022.

AMD shares, which have lost 26.9 percent since the start of 2022 and 33.5 percent since the beginning of December, rose 2.57 percent on Friday on the back of the news.

Xilinx (XLNX) shares, down 16% YTD 2022 and 22% YTD December, were up 2.6% at the close of trading on Friday.

Xilinx and AMD deal

The deal between the companies was announced back in October 2020, under the deal AMD will own 74% of the combined company and Xilinx shareholders will own the remaining 26%.

At the time, the management said that their companies have very similar chip development methods and they expect that the deal will save $300 million annually. Combining AMD with Xilinx would strengthen their fast-growing data centre chip business and expand their overall addressable market.

In a recent report, Xilinx said its shareholders will receive a special dividend of 37 cents per share after the merger with AMD is completed.

For Q4 2021, Xilinx posted record sales, surpassing $1bn for the first time, with earnings reaching $1.29 per share.