AMD Confirms Plans to Buy ATI

Advanced Micro Devices has agreed to buy Canadian graphics chip vendor ATI Technologies for around $5.4 billion in cash and stock, the companies announced today.

AMD sees the merger as a way to offer integrated products for the mobile computing and consumer electronics markets, it said. From 2008 onwards, it intends to offer a new range of integrated processing and graphics chips for custom applications, it said.

The acquisition, which is subject to shareholder and regulatory approvals, would turn AMD into one of the world's largest providers of graphics chips. ATI reported net income of $31.9 million on revenue of $652.3 million during its fiscal third quarter, which ended on May 31. At that time, the company said revenue for the current quarter would be between $620 million and $690 million.

In the last fiscal year, a combined AMD and ATI would have made sales of around $7.3 billion, the companies said.

ATI and AMD expect to complete the deal in the fourth quarter, subject to approval of ATI shareholders and U.S. and Canadian regulators.