AMD and ATI officially confirmed yesterday that the companies intend to create a joint venture worth no less than $5.4 billion, the same sum which was estimated by the analysts the previous week. The transaction is expected to be completed in the fourth quarter of 2006.

"ATI shares our passion and complements our strengths: technology leadership and customer centric innovation," said AMD Chairman and CEO Hector Ruiz. "Bringing these two great companies together will allow us to transcend what we have accomplished as individual businesses and reinvent our industry as the technology leader and partner of choice. We believe AMD and ATI will drive growth and innovation for the entire industry, enabling our partners to create differentiated solutions and empowering our customers to choose what is best for them."

According the both companies' representatives, AMD will acquire all of the 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 on July 21, 2006. Based upon the closing price of AMD common stock on July 21, 2006 of $18.26 a share, the consideration for each share of ATI common stock would be $20.47, comprised of $16.40 of cash and 0.2229 shares of AMD common stock, said the company.

"This combination means accelerated growth for ATI, and broader horizons for our employees," said Dave Orton, President and CEO of ATI. "All of our product lines will benefit. Joining with AMD will enable us to innovate aggressively on the PC platform, and continue to invest significantly in our consumer business to stay in front of our markets."

AMD expects it will finance the cash portion of the transaction also with a combination of cash and new debt. On the other hand, AMD has obtained a $2.5 billion term loan commitment from Morgan Stanley Senior Funding, Inc. which, together with combined existing cash, cash equivalents, and short term investments balances of approximately $3.0 billion, provides full funding for the transaction.

In case the transaction should not come to a closing, ATI has agreed to pay AMD a termination fee of $162.0 million under circumstances specified in the acquisition agreement.

"AMD expects that the transaction will be slightly accretive to earnings in 2007, and meaningfully accretive in 2008, before the inclusion of ATI acquisition-related charges, based upon AMD's plans to deliver more integrated and advanced platform solutions and thereby improve its position in commercial clients, mobile computing, gaming, media and emerging markets. AMD anticipates that it will reduce operating expenses by approximately $75 million for the combined company by the end of 2007," the manufacturer added.

Consequently, not even one piece of information was able to demolish the analysts' estimations or the so many rumors which have emerged two months ago. The sole difference is the fact that the information is now official.