AMD Gets a $622 Million Shot in the Arm from Mubadala
AMD Gets a $622 Million Shot in the Arm from Mubadala
November 19, 2007: Processor and graphics card developer, AMD systems has announced a $US 622 million ($AU 695 million) investment into the company from Mubadala.
United Arab Emirates based, Mubadala has agreed to buy 49 million newly minted shares in AMD for $12.70, the price at which the processor companies stock closed on November 15. The deal provides AMD with a cash investment of $US 608 million ($AU 679 million) to play with after paying $US 14.6 million in expenses. Despite the deal giving Mubadala an 8.1% stake in AMD, the investment firm will receive no boardroom representation as part of the deal.
“AMD is a great fit for Mubadala's investment approach — a spirited competitor and innovator led by a strong and visionary management team. We see significant opportunities for long-term growth and value creation.” Said Mubadala CEO and Managing Director Khaldoon Khalifa Al Mubarak.
The major financial boost comes at a good time for AMD as things haven’t been going quite to plan in the last financial year. The company recorded a net operating loss for 06-07 and had to fight for every percentage point of market share against processor giant, Intel and graphics card company NVIDA. The fight with Intel is nothing new for AMD, who have been head to head for many years and AMD has always been the underdog in that very public match up.
AMD’s indirect fight with NVIDIA didn’t really occur until 2006 when they bought out graphics card developer, ATI systems. ATI are NVIDIA’s biggest competitor and have a market position very similar to AMD’s against Intel, that being they are the second biggest producer but still a very substantially sized one. ATI also have several highly successful console gaming contracts, providing graphics cards for the Nintendo Wii and Xbox 360.
“We proudly welcome Mubadala, a world-class investor, to the AMD shareholder family. This investment strengthens AMD’s ability to deliver customer-centric innovation and choice to the marketplace, creating greater value for all of our shareholders,” said AMD Chairman and CEO Hector Ruiz.