Advanced Micro Devices (NASDAQ:AMD) has been scheduled for all-capital deals to buy Xilinx, Inc. (NASDAQ:XLNX). The chipmaker is best known to sell 1.7234 of its stocks per share of Xilinx, due to the AMD acronym. For a few weeks now I have personally stared at this offer as the reports amazed me. Analysts at the conference call where it was revealed appeared really successful at the offer. Managers from both sides appeared to be truly excited.
The CEO of Xilinx Victor Peng said that he’s all-in and wants to move on integration that sounded like an improvised and unprepared statement. CEO Lisa Su of AMD is highly celebrated after having led AMD stock at https://www.webull.com/quote/nasdaq-amd over the last few years to an impressive return.
It looks like Su’s hallmark FPGAs seems to be seeing growth. I was curious about how Su’s can rationalize or market the offer. This is a particular category of chip that varies from the more widely recognized GPU, CPU or memory. It is an extremely scalable and versatile chip which is more desirable than traditional applications for mass markets. I interviewed former AMD and former Xilinx developer Philip Freidin here to learn more about this technology.
Su leads the merged business towards a 20 percent annual composite growth rate (CAGR). The agreement has high profits per share (EPS) and free cash flow (FCF) per share, since AMD stock has a huge number of sales. In some of its niche fields, according to the management, Intel’s (NASDAQ:INTC) market share is taking place at a very fast pace, and its GPUs are doing really well against the backdrop of the rising AI with a tailwind in crypto-currency mining. The corporation is preparing synergies to do this, at $ 300 million, but if they can hit 20% the offer is definitely a bargain.
Su feels Xilinx is the best fit for AMD. What made my worry very soothed is that, for M&A’s sake, she said that she was not involved in M&A. In the past, she had little involvement in M&A, and before her AMD had not made any relevant agreements. Su asks out many strengths of Xilinx:
- The viable business model of Xilinx
- The long period of life for their chips
- Powerful collaborations between industry
Interestingly, when I interviewed Freidin about the contract rumors, he emphasized all these characteristics to me. AMD stock predicts that Xilinx will have a limit of $30 billion (TAM) available in the conference call. Xilinx currently has more than 50% market share.Later in the conference call, hard questions were raised as analysts confronted Altera Corp. about the unsuccessful acquisition by Intel. Altera is the biggest rival of Xilinx, and the transaction has so far not been unexpected.
You can check the AMD balance sheet at https://www.webull.com/balance-sheet/nasdaq-amd before investing.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.