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Chip designer Advanced Micro Devices, Inc’s (AMD) bid to acquire Xilinx, Inc is on its way to secure regulatory approval by the end of the first quarter of next year according to a statement from both companies. AMD announced its intent to acquire Xilinx last year for a $35 billion price tag, and throughout the course of this year, both parties were optimistic about it not facing any hurdles for approval. However, the statement confirms earlier rumors that approval is unlikely before the end of this year, which both companies had expected and outlined to investors at the time of the deal’s announcement in October 2020.
AMD’s Briefly Worded Statement Shares Few Details For Xilinx Merger Approval Delay
The joint statement from AMD and Xilinx was briefly worded, and it maintained a positive outlook for the deal that will diversify the former’s product portfolio. It outlined that while the merger failed to meet its expected closing for December 2021, progress is underway and the companies expect closing to now take place during the first quarter of next year.
Specifically, according to AMD and Xilinx:
Through acquiring Xilinx, AMD hopes to expand its presence into the customizable chip products market. These are commonly referred to as field programmable gate arrays (FPGAs), and they allow users to accelerate certain tasks or run them entirely on the FPGA depending on the use case and the costs of introducing a new central processing unit (CPU) into the system. Xilinx and Intel are the main industry players, and through acquiring the former, AMD which has convincingly challenged the larger Intel in several markets over the years, will gain a strong foothold in yet another.
Today’s statement follows a report from regulatory news services provider PaRR that surfaced earlier this month which claimed that officials in China were still evaluating the Xilinx merger. AMD’s statement seems to hint at this, as the company mentions that regulatory “conversations” are productively moving forward, with approval from all fronts still in sight.
The deal entered the second stage of regulatory scrutiny by the Chinese State Administration for Market Regulation (SAMR) in July this year, when the body was investigating market share for the new entity. This review can also enter the third phase of investigations, and should this happen, then it is still to close by AMD and Xilinx’s updated timeline as the process can take an additional two months. Regulatory bodies in the United States, European Union and the United Kingdom have not raised any potential anticompetitive concerns from the acquisition.
In a chat this March, Dr. Su had also shared the potential for the deal to give her company a strong foothold in the telecommunications sector which is currently at the center of a shift to fifth generation (5G) cellular connectivity. She explained that:
The $35 billion payment from AMD to Xilinx will be made completely in stock, with 1.7 AMD shares for each Xilinx share. Soon after the deal was announced, several Wall Street analysts had cast doubt on its approval by Xilinx’s board. AMD’s regulatory filings for the proposal revealed that it had projected to earn $22 billion in revenue by 2025.
