AMD to have smaller stake in new foundry

AMD and its Abu Dhabi investment fund partners have renegotiated the terms of their agreement, giving AMD a smaller share of its new foundry company and less money for selling a stake of the remaining chip-designing company, likely because of AMD's plunging stock price.

In October, AMD said that it would split into two companies, one to design chips and one to make them. Two investment funds owned by the government of Abu Dhabi said they'd contribute new capital to the new companies.

Under the new terms of the deal announced on Monday, AMD will now own less of the foundry company: a 34.2% stake with the rest controlled by the Advanced Technology Investment Company, one of the Abu Dhabi funds. Under the previous terms, AMD would have owned 44.4 percent of the company.

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AMD and its Abu Dhabi investment fund partners have renegotiated the terms of their agreement, giving AMD a smaller share of its new foundry company and less money for selling a stake of the remaining chip-designing company, likely because of AMD's plunging stock price.

In October, AMD said that it would split into two companies, one to design chips and one to make them. Two investment funds owned by the government of Abu Dhabi said they'd contribute new capital to the new companies.

Under the new terms of the deal announced on Monday, AMD will now own less of the foundry company: a 34.2% stake with the rest controlled by the Advanced Technology Investment Company, one of the Abu Dhabi funds. Under the previous terms, AMD would have owned 44.4 percent of the company.

In addition, the Mubadala Development Company, the other Abu Dhabi company, now will pay less per share for its stake in AMD, so that it will likely pay less than the previously agreed $314 million for its stake. The new price per share will be either the average closing price per share of the stock for the 20 days up to Dec. 12 or the average closing price per share of the stock during the 20 days prior to the closing of the transaction, whichever is lower. Per the original deal, Mubadala will still purchase 58 million shares, but will now have an additional 5 million warrants to purchase AMD stock, for a total of 35 million warrants.

When AMD first announced the deal in October, its stock was trading at around $4.50 per share. On Dec. 5, its shares closed at $2.13.

The companies did not change the time frame for completing the agreement. They still expect the deal to close at the beginning of 2009, AMD said.

The IDG News Service is a Network World affiliate.