What happened
Shares of Xilinx (NASDAQ: XLNX) leaped 8.6% on Tuesday after the company said it would be acquired by rival Advanced Micro Devices (NASDAQ: AMD).
So what
AMD reached an agreement to purchase Xilinx for $35 billion in stock. Under the terms of the deal, Xilinx stockholders will receive 1.7234 shares of AMD stock for each Xilinx share they own. That values Xilinx's shares at about $143, or nearly 25% higher than their closing price on Monday.
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AMD says the deal will help strengthen its cloud and edge computing platforms, allowing it to better seize massive growth opportunities in the data center, gaming, next-gen communications, and other rapidly expanding markets.
"Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry's high-performance computing leader and partner of choice for the largest and most important technology companies in the world," AMD CEO Dr. Lisa Su said in a press release.
Now what
AMD believes it can streamline the combined company's operations, saving roughly $300 million in annual expenses in the process. In turn, the deal is projected to boost AMD's earnings and cash flow generation immediately upon closing. The deal is expected to occur by the end of 2021, pending regulatory and shareholder approval.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Xilinx. The Motley Fool has a disclosure policy.
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