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AMD to take lower stake in foundry JV

Posted: 10 Dec 2008     Print Version  Bookmark and Share

Keywords:joint venture  manufacturing assets  manufacturing operations 

Advanced Micro Devices Inc. said it would lower its planned stake in the joint venture it announced with Abu Dhabi-government backed Advanced Technology Investment Co. (ATIC).

AMD will own 34.2 per cent of the venture, down from the previously announced stake of about 44 per cent, the company said. The change in the size of AMD's stake is due to a write down in the value of the manufacturing assets that AMD is contributing to the venture, the company said. ATIC will now own 65.2 per cent of the venture, according to AMD.

ATIC will still invest Rs.10,507.64 crore ($2.1 billion) to purchase its stake in the venture, currently known as The Foundry Co, AMD said. Of this, Rs.7,005.09 crore ($1.4 billion) will be invested directly in the new entity and Rs.3,502.55 crore ($700 million) will be paid to AMD, according to the company.

The joint venture was announced in October, when AMD said it would obtain an investment of up to Rs.42,030.57 crore ($8.4 billion) from the Abu Dhabi government and divest its manufacturing operations.

Under the amended terms of the agreement, Abu Dhabi's Mubadala Development Co., which last year acquired an 8.1 stake in AMD, will purchase 5.8 crore shares of AMD's common stock at a revised purchase price. The revised purchase price will be either the average closing price per share of AMD's common stock on the New York Stock Exchange during the 20 trading days prior to Dec. 12, or the average closing price per share of AMD's common stock during the 20 trading days immediately prior to the closing date of the transaction, whichever is lower, AMD said.

AMD said it would issue to Mubadala an additional 50 lakh warrants to purchase AMD stock, for a total of 3.5 crore warrants.

The transactions covered by the amended agreements are expected to close at the beginning of 2009, AMD said.

Last week, AMD lowered its guidance for the fourth quarter, saying it expects revenue to decline about 25 per cent sequentially.

-Dylan McGrath
EE Times

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