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AMD completes corporate split

by Scott Bicheno on 3 March 2009, 11:42


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Smart move?

AMD had officially closed the ‘Asset Smart' transaction first announced almost six months ago yesterday. It will now officially spin off its manufacturing operations into a separate company of which it will be a minority shareholder.

This company has been provisionally called The Foundry Company (TFC), but will apparently be given its proper name, logo, etc later this week.

The move is ultimately designed to improve AMD's immediate and future financial position by bringing in a lump sum of $700 million from TFC co-investor and majority shareholder ATIC (Advanced Technology Investment Company), transferring $1.1 billion of debt to TFC and freeing AMD from the financial burden of running its own fabs.

The jury is still out on how good a deal AMD shareholders got from this. It could be argued that AMD needed to do the deal in order to survive but if that's the case it surely put ATIC in a strong bargaining position when the terms of the deal were being discussed.

As well as giving AMD $700 million, ATIC is investing $1.4 billion in TFC directly. For this it gets 65.8 percent of the new company, leaving AMD with a 34.2 percent stake. The ratio was originally going to be 55.6 percent to ATIC and 44.4 percent to AMD, but last December the deal was amended to reflect the decline in AMD's share price since in the intervening time.