AMD Stock: AMD Purchase Of Xilinx Delayed By Regulatory Reviews

Chipmaker Advanced Micro Devices (AMD) still expects to complete its acquisition of Xilinx (XLNX) but regulatory reviews have taken longer than expected. AMD stock dipped Friday.

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Santa Clara, Calif.-based AMD announced its planned purchase of San Jose, Calif.-based Xilinx in October 2020. At the time, the all-stock deal was worth about $35 billion. The companies originally expected the transaction to close by the end of 2021.

However, late Thursday, AMD and Xilinx updated the status of the deal, saying it now should close in early 2022.

“We continue making good progress on the required regulatory approvals to close our transaction,” the companies said in a joint news release. “While we had previously expected that we would secure all approvals by the end of 2021, we have not yet completed the process and we now expect the transaction to close in the first quarter of 2022. Our conversations with regulators continue to progress productively, and we expect to secure all required approvals.”

China Stalls Approval Process

Amid U.S.-China trade tensions, semiconductor deals have faced approval challenges from Chinese regulators.

“China remains the limiting factor with its regulatory body still having not signed off on the deal,” Wedbush Securities analyst Matt Bryson said in a note to clients. “We continue to expect the deal will eventually be approved given a lack of clear market concentration concerns.”

Bryson rates AMD stock as outperform with a price target of 165.

On the stock market today, AMD stock fell 0.9% to 143.90. Xilinx stock dropped 0.9% to 212.03.

News Positive For AMD Stock

Rosenblatt Securities analyst Hans Mosesmann says the delay in the approval process was not a surprise.

“We believe the delay from end of 2021 to Q1 2022 had become consensus,” he said in a note to clients. “The fact that AMD continues to be constructive on the deal getting done is a positive for the shares.”

Mosesmann rates AMD stock as buy with a price target of 180.

AMD and Xilinx said the terms of the transaction have not changed. Xilinx shareholders will receive 1.7234 shares of AMD common stock for each share of Xilinx common stock they hold. After the deal closes, current AMD shareholders will own 74% of the combined company, while Xilinx shareholders will own 26%.

AMD said the Xilinx purchase will help it expand its data-center business. Xilinx specializes in programmable logic chips. AMD makes central processing units and graphics processors for personal computers and servers.

Next up for AMD is its virtual presentation at CES 2022 on Tuesday. During the webcast, AMD Chief Executive Lisa Su will premiere the company’s latest Ryzen processors and Radeon graphics products.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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