AMD’s Xilinx Acquisition Moves Forward As Regulatory Waiting Period Expires

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Semiconductor company Xilinx, Inc. has confirmed that the mandatory waiting period required by the United States Federal Trade Commission (FTC) and the Department of Justice to conduct an investigation to determine whether an acquisition violates American anti-trust laws for the company's acquisition by Advanced Micro Devices Inc (AMD) has expired. AMD announced its decision to acquire Xilinx in October last year, with Xilinx set to become an AMD subsidiary once the deal closes.

AMD's Xilinx Acquisition Fails To Draw Regulatory Scrutiny As Stipulated Time Period Under 1976 HSR Act Expires

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires that after entering into a merger or an acquisition, the parties must wait for government agencies to conduct investigations into the deal. These investigations determine whether the deal violates any laws or would be competitively harmful.

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Xilinx's revelation came in the form of a Securities and Exchange Commission (S.E.C) filing yesterday which confirmed that the stipulated waiting period for its acquisition by AMD as required by the HSR Act has now expired. This means that the deal can now move forward towards closing, with other requirements such as international regulatory approval and shareholder approval yet to be met.

The full text of Xilinx's announcement reads as follows:

As previously announced on October 26, 2020 Xilinx, Inc. (“Xilinx”) entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Xilinx, Advanced Micro Devices, Inc. (“AMD”) and Thrones Merger Sub, Inc., a wholly owned subsidiary of AMD (“Merger Sub”), pursuant to which, subject to the terms and conditions set forth therein, Merger Sub will merge with and into Xilinx (the “Merger”), with Xilinx surviving such Merger as a wholly owned subsidiary of AMD.

The completion of the Merger is conditioned upon, among other things, the early termination or expiration of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), relating to the consummation of the Merger. Effective as of 11:59 p.m. EST on January 11, 2021, the waiting period under the HSR Act expired with respect to the Merger.

The completion of the Merger remains subject to other closing conditions, including the receipt of certain approvals and clearances required under the competition laws of certain foreign jurisdictions, adoption of the Merger Agreement by Xilinx’s stockholders and approval of the issuance of shares of AMD’s common stock in the Merger by AMD’s stockholders.

Xilinx announced its Versal Adaptive Compute Acceleration Platform in June last year. Such platforms will diversify AMD's product lineup should the deal go through. Image: Xilinx

AMD expects the deal to diversify its revenue stream and enable it to target the larger semiconductor sphere more effectively. The chip designer also shared a similar update with the S.E.C. yesterday, confirming that the waiting period for its subsidiary Thrones Merger Sub, Inc to merge with Xilinx under the HSR Act had expired, with its announcement also shared by Xilinx with the S.E.C.

According to details that AMD made public in December, the chipmaker expects to grow its revenues to $22 billion by the end of 2025 before the effect of the deal is factored in. Forecasts for Xilinx made by its management prior to the pandemic, shared by AMD in the December S4 filing show that it expected to earn $5.4 billion in revenue in 2025, with this forecast being revised upwards in the changing regulatory environment following the American government's actions against China and market changes following the ongoing global pandemic.

More interestingly, while AMD's own projections were for years up to 2025, the data that it shared with Xilinx and that the latter adjusted to account for the aforementioned environmental changes. This reveals that while AMD itself expected to earn $17 billion revenue by the end of its fiscal year 2023, Xilinx's adjustments brought this down to $16 billion, insinuating that perhaps the projections for 2024 and 2025 might be adjusted downward similarity.

Through the deal, AMD will better position itself to compete against larger rival Intel Corporation and target the growing fifth-generation (5G) cellular and datacenter markets as it is in the midst of a comeback in the personal computing segment owing to the manufacturing process advancements of the Taiwan Semiconductor Manufacturing Corporation (TSMC).

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