AMD acquires ATI

On Friday, Reuters reported a rumored deal that would see microprocessor manufacturer AMD acquire graphics-card maker ATI was close to complete. Today, it became official.

Sunnyvale, California-based AMD today announced that it has come to an agreement to purchase ATI (headquartered in Markham, Ontario, Canada) in a deal worth roughly $5.4 billion in cash and shares. Each company's board of directors voted for the deal unanimously; now the acquisition must meet the approval of ATI shareholders and US and Canadian regulatory bodies before it can be finalized.

AMD has said that ATI will continue to make the specialized, high-end graphics cards it was known for, but that it will also work more on integrated graphics solutions. The company expects earnings per share to increase slightly next year, and "meaningfully" in 2008. Also by 2008, AMD anticipates its operating expenses to be down by about $75 million.

An ATI representative told GameSpot that any layoffs due to the merger would likely be minimal. "It's too early to say, but for the most part there's no overlap within the company," the representative said. ATI currently employs 4,200 people, and the postmerger AMD is expected to employ approximately 14,900.

As of press time, shares of AMD were off a little more than 4 percent from Friday's closing price, trading down $0.80 to $17.46. On the other hand, shares of ATI received a significant boost on the news, jumping more than 18 percent, up $3.03 to $19.59.