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Wednesday, December 2, 2020

AMD enters advanced talks with Xilinx for a potential buyout.

  • AMD enters advanced talks with Xilinx for a potential buyout.
  • The deal could be valued at over £23 billion.
  • Xilinx took a hit last year as the U.S. banned Huawei Technologies.

The Wall Street Journal reported Advanced Micro Devices Inc (NASDAQ: AMD) to have entered advanced talks with Xilinx Inc (NASDAQ: XLNX) on Thursday for a potential buyout. AMD is expected to invest over £23 billion to acquire its rival chipmaker.

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AMD opened about 2% down on Friday and slid another 1% before the market close. Including the price action, shares of the company are now trading at £63.70 per share that represents a massive 120% growth since March when the Coronavirus pandemic had pushed the stock down to as low as £29.67 per share.

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AMD is currently valued at £75 billion and has a price to earnings ratio of 161.54. Learn more about why prices rise and fall in the stock market.

AMD and Xilinx could strike a deal by next week

Sources also confirmed on Thursday that the two companies are expected to strike a deal by next week. Amidst the Coronavirus pandemic that has so far infected a little under 8 million people in the United States and caused over 200 thousand deaths, AMD has seen a significant increase in demand in recent months. In its report published in late July, AMD posted £121 million of net income in the fiscal second quarter.

Both AMD and Xilinx are yet to make an official statement on the news. Advanced Micro Devices launched its new Zen 3 Ryzen 5000 processors earlier this week.

Xilinx focuses primarily on building programmable chips to cater to data centres from across the globe. Its products help improve the efficiency of 5G telecommunications base stations and artificial intelligence-related tasks.

Xilinx took a hit as the U.S. banned Huawei Technologies

The San-Jose based company took a massive hit in 2019 as the U.S. President, Donal Trump, blacklisted one of its most prominent customers, Huawei Technologies, from doing business with the American companies due to concerns of national security.  

The United States government has since included a range of China-based companies on its blacklist, including a number of Xilinx customers.

Shares of Xilinx jumped close to 15% in premarket trading on Friday. It retained the intraday gain and closed the regular session at £92.75 per share. On a year to date basis, the £22.65 billion company that has a price to earnings ratio of 47.34 is currently 20% up in the stock market after recovering from a low of £52.85 per share in March.

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