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Monday, July 24, 2006

ATI Shareholders Saying Thanks

Stock Tickers: ATYT, AMD, NVDA, INTC

Shareholders of ATI Technologies Inc. (ATYT) have much to be thankful for today. There have been rumors that AMD (AMD) was going to acquire them on and "on and off" basis for months now. The question always seemed to revolve around AMD share weakness, or at least those were the discussions we have had.

ATYT shareholder have to be thankful because regardless of whether ATYT or NVIDIA (NVDA) were chosen for one hot game console or the other, the shares have just never been able to get over $20 and STAY over $20 for any period. This is a cash and stock deal. AMD will acquire all of the outstanding common shares of ATI for a combination of $4.2 billion in cash and 57 million shares of AMD common stock, based on the number of shares of ATI common stock outstanding on July 21, 2006. All outstanding options and RSUs of ATI will be assumed. Based upon the closing price of AMD common stock on July 21, 2006 of $18.26 a share, the consideration for each outstanding share of ATI common stock would be $20.47, comprised of $16.40 of cash and 0.2229 shares of AMD common stock.

AMD shares are lower and this does in fact value the buyout under $20.00 right now, but this is still a good deal for ATYT holders. If ATYT had ever managed to get way up like its NVDA rival, it might be a different story. But then again, IF, IF, IF.....

AMD is sort of punishing their shareholders by doing this while their own shares are at 52-week LOWS, but maybe ATYT holders are getting the small stock portion of the deal on the cheap. It may be hard to call AMD cheap while it is on the lows and in the midst of what may be yet another losing battle with Intel (INTC), but that is for the market to decide. there had also been talk that Intel (INTC) would surface, but ATYT said they had not been contacted by Intel.

This probably isn't all that great for AMD holders who have already been suffering, but ATYT holders can now all walk away with a profit and determine how they want to put their cash to work. This is subject to approvals, but there should not be any issues on the regulatory front.

NDVA is trading up just over 5% on hopes that either they get more Intel and other business and/or that since ATYT fell by the wayside they could be next. Who knows for sure, but for now Merger Mania continues.

Jon C. Ogg
July 24, 2006
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